Nike shoes are seen in the King of Prussia Mall, as global markets brace for a hit to trade and growth caused by US President Donald Trump’s decision to impose import tariffs on dozens of countries, in King of Prussia, Pennsylvania, US, April 3, 2025. — Reuters
President Donald Trump has reached a trade agreement with Vietnam that will see a 20% tariff imposed on many of its exports—far less than the 46% initially proposed. The announcement comes just ahead of a 9 July deadline Trump had set to raise tariffs on a broad range of imports.
In his statement, Trump noted that goods trans-shipped through Vietnam from third countries would be subject to a 40% levy, while Vietnamese markets will open to US goods at zero tariffs.
The deal is aimed at easing trade frictions and avoiding the broader impact of a tariff surge on Vietnam, one of the United States’ key trading partners. Trump made the announcement following a conversation with Vietnam’s President To Lam, calling it a “great honour” to finalise the arrangement.
The agreement is seen as a compromise move to reduce pressure on importers while maintaining the administration’s tough trade posture.
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 United States’ 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 high-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 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 United States from Vietnam as importers sought workarounds for the China levies.
Since 2018, Vietnam’s exports have up nearly threefold from less than $50 billion that year to about $137 billion in 2024, Census Bureau data shows. US exports to Vietnam are up only about 30% in that time – to just over $13 billion last year from less than $10 billion in 2018.
“‘Transshipping’ 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 United States 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 per cent, 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 program 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 cooperation with Washington, particularly at a time when China has diverted its attention in the South China Sea from Vietnam to the Philippines.”
