Tariff Tantrum Tamed: Trump and Vietnam Forge a Future-Friendly Trade Accord

It has been reported by former US President Donald Trump that the US and Vietnam have signed a historic trade agreement, just days short of the scheduled reimposition of steep tariffs that threatened to dismantle billions of dollars of two-way commerce. The pact, after weeks of grueling negotiations, is to reshape tariff structures and address deep-seated issues of trade imbalances and foreign content in Vietnamese exports.

 

Key highlights:

 

Tariff Suspension Extended: The agreement blocks the imposition of 46% retaliatory tariffs on Vietnamese imports set to begin on July 9, 2025, following a 90-day suspension announced in April.

 

Structured Tariff: Tariffs imposed by Vietnam on Vietnamese exports to the US under the new format will be foreign content-based. The ones with more foreign (principally Chinese) content will pay 20% or more tariffs, and the domestically manufactured ones in Vietnam may pay as little as 10%.

 

Vietnam's Promises: Vietnam promised to reduce its reliance on Chinese technology in the electronics sector and to make a concerted effort to prevent illegal trans-shipment of Chinese goods via its ports.

 

US Needs and Vietnamese Concessions: The US had been seeking to get Hanoi to open its markets further to US products, such as aircraft, farm produce, and energy. Vietnam signaled its readiness to relax non-tariff barriers and increase imports from the US but made no purchasing pacts.

 

Trade Surplus Woes: Vietnam's US trade surplus has increased to $12.2 billion in May 2025, year-on-year growth of 42%, further heightening US scrutiny and the need for a new deal. Industry Implication: The deal is significant to big global players like Nike and Nintendo reliant on Vietnamese manufacture and would have faced huge cost rises under the imposing tariffs.

 

Trump's statement follows a series of high-level phone calls and negotiations, with both sides being hopeful about the deal's ability to stabilize trade ties and spur economic growth in the two countries.

 

Source: Reuters, Bloomberg, Economic Times