During last-minute negotiations, President Donald Trump announced a new trade deal with Vietnam, stating that the US will impose 20% tariffs on imports from the country. This is a significant decrease from the previous 46% levy that was set to go into effect next week as part of Trump’s “reciprocal” tariffs announced in April. Other countries, such as the European Union and Japan, are also working to secure their own trade deals with the US before the planned tariff increases. According to Trump, Vietnam has agreed to charge no tariffs on US products as part of the agreement. Tariffs, which are taxes on imports, are typically paid by the company buying the goods rather than the manufacturer. While importers can choose to absorb the extra cost, they often pass it on to consumers, leading to concerns from US trading partners about a decrease in demand for their goods. As part of the deal, the US will also impose a higher tariff of 40% on goods that are “trans-shipped” through Vietnam, a process where Chinese products are shipped through the country. Peter Navarro, Trump’s senior counselor on trade and manufacturing, has stated that a third of all Vietnamese exports to the US are actually Chinese products. Trump also announced on social media that Vietnam will give the US total access to their markets, meaning American products can be sold in Vietnam with no tariffs. Vietnam has become a major manufacturing hub for companies like Nike, Apple, and Lululemon, as they moved their factories out of China to avoid Trump’s tariffs. The initial news of the trade deal caused stock prices of companies operating in Vietnam to rise, but they were later trimmed when it was revealed that products would still face a 20% tax. The American Chamber of Commerce in Hanoi expressed optimism about the trade deal, stating that companies will continue to ship goods from Vietnam to the US. However, concerns were raised about the proposed tariff on trans-shipping, with some questioning the definition of the term and its potential impact on trade. Vietnam’s General Secretary To Lam also spoke with Trump on the phone, inviting him to visit the country. In addition, the Trump family has announced development projects in Vietnam, including a $1.5 billion investment in hotels, golf courses, and luxury real estate, as well as plans for a Trump Tower in Ho Chi Minh City. Trump initially imposed high tariffs on trading partners in April, citing a lack of reciprocity, but later paused and lowered them to 10%. The White House reports that many countries have approached the US to negotiate trade deals since then, with agreements being reached with Britain and China so far.
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