Trump Announces Trade Agreement with Vietnam
On July 2 local time, U.S. President Trump announced on the social platform Truth Social that the U.S. has reached a trade agreement with Vietnam. The agreement stipulates that goods exported from Vietnam to the U.S. will be subject to a tariff of at least 20%, aimed at reducing the growing trade deficit between the two countries.
According to the agreement, for so-called "re-exported" goods (products originating from other countries and transshipped through Vietnam), the U.S. will impose a higher tariff of 40% to prevent other countries from bypassing U.S. trade restrictions. Trump also stated that U.S. exports to Vietnam will not be subject to any tariffs, calling Vietnam "completely open to the U.S. market."
Vietnam Becomes a Major U.S. Trade Partner
According to U.S. Census Bureau data, Vietnam has become the U.S.'s 10th largest trade partner and 7th largest import source, with Vietnam's exports to the U.S. totaling over $130 billion in 2023. Vietnam's prominent role in the garment manufacturing sector has made it a key supplier for well-known American brands such as Nike and Lululemon.
This agreement marks the second agreement the U.S. has reached with a trading partner since Trump's announcement of reciprocal tariffs in April, the first being a trade arrangement with the UK. Previously, Vietnam had been subject to reciprocal tariff rates as high as 46%, which have now been uniformly adjusted to 20%, with re-exported goods subject to 40% tariffs.
U.S. Continues to Press on Trade Negotiation Deadlines
In April, Trump proposed imposing reciprocal tariffs on almost all trade partners, with rates determined by the size of the trade deficit with the U.S., temporarily setting them at 10%, with a deadline of July 9. As the deadline approaches, U.S. trade negotiations with several countries have stalled, and Trump has stated he will not consider extending the grace period, planning to directly send tariff notice letters to trade partners to inform them of the rates.
Trump specifically mentioned Japan, stating that Japan would face "30%, 35%, or whatever rate the U.S. decides," and questioned the possibility of reaching an agreement with Japan. He noted, "I doubt we can reach an agreement with Japan; they are very tough and spoiled."
EU Seeks Tariff Exemptions in Key Areas
Meanwhile, the EU has expressed willingness to accept a uniform 10% tariff on most exports to the U.S. but hopes to obtain exemptions in key areas such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft to avoid further harm to Europe's high-tech industries and key economic sectors.
Currently, the U.S. levies a 25% tariff on EU cars and parts, and a 50% tariff on steel and aluminum. If negotiations break down, the U.S. could impose higher tariffs on most EU goods, escalating trade tensions between the U.S. and Europe.
Global Trade Situations Remain Uncertain
Analysts point out that Trump's announcement of the agreement with Vietnam marks progress in the U.S.'s tariff negotiation strategy but also highlights greater uncertainty in the global trade situation. Amid accelerated adjustments in the global supply chain, tariff policy directions will have a profound impact on Southeast Asian manufacturing and the U.S.-Europe trade landscape.
Investors and companies need to closely monitor the outcomes of the U.S.'s negotiations with major trade partners around July 9 to assess possible tariff changes and their effects on supply chains, costs, and global market trends.
