Trump Announces Trade Deal With Vietnam: Vietnamese Exports To US Will Incur 20% Duty

President Donald Trump has unveiled a new trade agreement with Vietnam, effective from July 2, 2025. This deal permits U.S. goods to enter Vietnam without any tariffs, while Vietnamese exports to the U.S. will incur a 20% duty. On Truth Social, Trump described it as "a Great Deal of Cooperation between our two Countries."

In April, Trump had imposed a 46% tax on imports from Vietnam as part of his reciprocal tariff strategy aimed at countries with which the U.S. has trade deficits. However, he suspended these tariffs for 90 days to facilitate negotiations like the one with Vietnam. The suspension ends on July 1, 2025.

Trade Deficit and Strategic Moves

The United States recorded a $122 billion trade deficit with Vietnam last year, ranking it third after China and Mexico in terms of trade gaps. The deficit represents the difference between what the U.S. imports from and exports to other countries.

Mary Lovely from the Peterson Institute for International Economics commented on the situation: "Vietnam has been very keen to get out from under this," she said. "This is forcing a smaller country to eat it, basically. We can do that. It's the big countries that everybody's keeping their eyes on."

Transshipping Concerns

In addition to the 20% tariffs on Vietnamese goods, Mr. Trump announced a 40% tax on transshipping—goods passing through Vietnam en route to the U.S. Washington has raised concerns about Chinese products avoiding higher U.S. tariffs by being rerouted through Vietnam.

Vietnam's strategic importance has grown as companies seek alternatives to China for their supply chains. In 2023, it was unique in hosting both President Joe Biden and Chinese leader Xi Jinping for state visits.

Diplomatic Relations and Economic Developments

The same year saw the U.S. elevate Vietnam to its highest diplomatic status: comprehensive strategic partner, aligning it with China and Russia in terms of diplomatic relations.

A significant economic development occurred in May when Vietnam approved a $1.5 billion project by the Trump Organisation and a local partner to construct an extensive golf resort near Hanoi.

This project covers an area equivalent to 336 football fields and highlights Vietnam's role in countering China's influence in the region.

Despite reaching an agreement with only one other country—the United Kingdom—Mr. Trump's administration continues efforts to negotiate similar deals before the tariff suspension ends.

A framework agreement with China remains separate from these negotiations but indicates ongoing discussions in resolving trade disputes.