HANOI/WASHINGTON – In a significant diplomatic breakthrough, President Trump announced on July 2, that the United States and Vietnam have agreed to a preliminary tariff deal. Under this framework, U.S. tariffs on Vietnamese exports will be temporarily set at 20%, replacing the 46% “reciprocal” tariffs previously threatened. However, imports routed through Vietnam from third countries – especially China – will face a steeper 40% tariff to combat transshipment practices.
Vietnam, in return, commits to opening its market to a broad range of American goods – including tech, agricultural commodities, shoes, and consumer products – while strengthening rules of origin to ensure genuine Vietnamese production.
Global Trade Experts Weigh In on Strategic Rebalancing
Analysts internationally view the deal as a tactical play by the U.S. to curb China’s indirect access to American markets via Vietnam. While it offers a lifeline to Vietnam’s export-heavy economy, concerns remain:
- Experts warn that the transshipment tariff depends heavily on definitions; a broad interpretation could limit legitimate exports and invite Chinese retaliation..
- Vietnamese industries—especially seafood, garments, and electronics—have expressed mixed reactions, welcoming relief from the 46% tariff but anxious about the higher 40% risk for global supply chain goods.
Economists note that nuanced rules of origin and IP standards remain undefined and crucial to the ultimate impact.
Regional Ripple Effects and Future Trade Dynamics
The agreement has already strengthened stocks of U.S. apparel brands like Nike and Lululemon—but some firms may see profits dip by as much as 20%, according to UBS. Meanwhile, Vietnam’s benchmark VN Index showed cautious optimism after the deal’s announcement.
The deal sets a template for future U.S. trade negotiations in Asia, with leaders in India, Cambodia, and Australia watching closely.
What’s Next – From Draft to Full Implementation
While the joint statement remains a draft framework, both governments aim to finalize a binding deal “within the coming weeks,” promising a “substantial reduction” in U.S. tariffs. Key unresolved details include:
- Finalized tariff percentages across product categories
- Precise rules of origin definitions to prevent abuse
- Vietnam’s IP regime enhancements and other non-tariff reforms
- Timelines for continued rounds of negotiations
Vietnamese officials are also seeking recognition as a market economy by the U.S. and the removal of high-tech export restrictions.
Regional trade relations to be reshaped
This preliminary agreement marks the first U.S. trade deal in Asia under the Trump administration and signifies a strategic pivot toward supply chain security and anti-transshipment enforcement. If finalized smoothly, it may reshape regional trade relations, influence future negotiations with China, India, and ASEAN countries, and underscore Vietnam’s sensitive economic position between Washington and Beijing. (zai)