Trump touts trade deal with Vietnam

Washington/Hanio — The US will place a lower-than-threatened 20% tariff on many Vietnamese exports, US President Donald Trump said on Wednesday, cooling tensions with its tenth-biggest trading partner days before a hike on levies on most imports.

Vietnamese goods will now face a 20% tariff and any trans-shipments from third countries through Vietnam will face a 40% levy, he said. Vietnam would accept US products with a no tariffs, he added.

“It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam,” Trump said on Truth Social after speaking with Vietnam's top leader, To Lam.

Trump’s announcement comes just days before a July 9 deadline he set to resolve negotiations before he ramps up tariffs on most imports, one of the Republican's signature economic policies.

Under that plan announced in April, US importers of Vietnamese goods would have had to pay a 46% tariff.

Details were scarce, and it was not immediately clear how any trans-shipment provision aimed at products largely made in China and then finished in Vietnam would be implemented.

The Vietnamese government said in a statement that the two countries agreed on a joint statement about a trade framework. It did not confirm the specific tariff levels mentioned by Trump.

Vietnam would commit to “providing preferential market access for US goods, including large-engine cars”, the government in Hanoi said.

A deal between the two countries would be a political boost for Trump, whose team has struggled to quickly close deals with Washington's biggest trading partners ahead of the deadline. While the administration has teased a forthcoming deal with India, truces reached earlier with Britain and China were limited in scope. Talks with Japan, the US’s sixth-largest trading partner and closest ally in Asia, appeared deadlocked.

The US is Vietnam’s largest export market and the two countries’ growing economic, diplomatic and military ties are a hedge against Washington’s biggest strategic rival, China. Vietnam has worked to retain close relations with both superpowers.

Shares of major US apparel and sportswear makers including Nike, Under Armour and North Face maker VF Corp rose on the news.

Lam also asked Trump for the US to recognise Vietnam as a market economy and remove restrictions on the exports of hi-tech products to the country, Vietnam said. Those changes have long been sought by Hanoi and dismissed by Washington.

The White House and the Vietnamese trade ministry did not respond to requests for additional comment.

Growing ties

Since Trump imposed tariffs on hundreds of billions of dollars in Chinese goods in his 2017-2021 term, US trade with Vietnam has exploded, though almost all of it in the form of goods to the US from Vietnam as importers sought workarounds for the China levies.

Since 2018, Vietnam’s exports are up nearly threefold from less than $50bn that year to about $137bn in 2024, Census Bureau data shows. US exports to Vietnam are up only about 30% in that time — to just over $13bn last year from less than $10bn in 2018.

"‘Trans-shipping’ is a vague and often politicised term in trade enforcement. How it’s defined and how it’s applied in practice will shape the future of US-Vietnam trade relations,” said Dan Martin, business adviser at Dezan Shira & Associates, on LinkedIn.

Trump announced a wave of tariffs for countries around the world on April 2, before pausing the implementation of most duties until July 9. More than a dozen countries are actively negotiating with the Trump administration to avoid a steep spike in tariffs on their exports. Britain accepted a 10% US tariff on many goods, including autos, in exchange for special access for aircraft engines and British beef.

Like the agreement struck with Britain in May, the one with Vietnam resembles more a framework than a finalised trade pact. China and the US also came to a truce in a tit-for-tat tariff battle in which Beijing restored American access to some rare-earth minerals, but the two sides left most of their disagreements to later negotiations.

“Had Trump stuck with 46%, much higher than the current tariff on China, Vietnam feared it would be disadvantaged by its competitors especially in Southeast Asia,” said Murray Hiebert, a senior associate with the Southeast Asia programme at CSIS, a think-tank.

“This likely would have dented Vietnam’s trust in the US and it might have toned down some of its security co-operation with Washington, particularly at a time when China has diverted its attention in the South China Sea from Vietnam to the Philippines.”

Reuters