The United States will place a lower-than-promised 20 per cent tariff on many Vietnamese exports, Donald Trump said on Wednesday (Jul 2), cooling tensions with its tenth-biggest trading partner days before the US president could raise levies on most imports.
Vietnamese goods would face a 20 per cent tariff and trans-shipments from third countries through Vietnam will face a 40 per cent levy, he said. Vietnam could import US products with a zero per cent tariff, 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 Jul 9 deadline 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 per cent tariff.
Details were scant. It was not clear which products Trump’s 20 per cent tariff would apply to, or whether some would qualify for lower or higher total duties.
Also left to later discussion was how the new trans-shipment provision, aimed at products largely made in China and then labelled “Made in Vietnam”, would be implemented and enforced.
The Vietnamese government did not confirm the specific tariff levels in a statement celebrating what it described as an agreement on a joint statement about a trade framework.
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’ sixth-largest trading partner and closest ally in Asia, appeared to hit roadblocks.
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 closed higher on Wednesday on the news.
Lam also asked Trump for the US to recognise Vietnam as a market economy and remove restrictions on the exports of high-tech products to the country, Vietnam said. Those changes have long been sought by Hanoi.
The White House and the Vietnamese trade ministry did not respond to requests for additional comment.
GROWING TRADE 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 US$50 billion that year to about US$137 billion in 2024, Census Bureau data shows. US exports to Vietnam are up only about 30 per cent in that time – to just over US$13 billion last year from less than US$10 billion in 2018.
“‘Transshipping’ is a vague and often politicised term in trade enforcement,” said Dan Martin, business adviser at Dezan Shira & Associates, on LinkedIn.
“How it’s defined and how it’s applied in practice will shape the future of US-Vietnam trade relations.”
Trump announced a wave of tariffs for countries around the world on Apr 2, before pausing the implementation of most duties until Jul 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 per cent 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 a framework rather 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.
Source : https://www.channelnewsasia.com/world/trump-vietnam-trade-deal-lower-tariffs-5216671
