President Donald Trump said he had reached a large trade deal with Vietnam in a last-minute slam-bang move just before a July 9 deadline. Under this agreement, announced through Truth Social, symmetrical tariffs and unfettered access of U.S. businesses to Vietnam will be established, a move brazen in the pursuit of Trump in his mission of getting reciprocal tariffs set.
/*Background: Tariff Threats to Trade Breakthrough*/
The history of the current announcement dates back to April 2, 2024, when Trump announced his Liberation Day tariff policy with a globally inflicting 46 percent tariff on Vietnamese goods to fight the U.S. merchandise deficiency, which U.S. firms expected would be around 123.5 billion in 2024. Vietnam followed up immediately with emergency meetings of the Cabinet and with vows to crack down on illegal Chinese transshipment of goods. For the following 90 days, negotiations were heated on both sides: reduction of the tariffs was postponed to a 10% level to enable negotiations. Trump officially declared a truce on July 2, by which Vietnam will be charged a 20% import tariff, 40% on imports from a related third party, whereas American exports to Vietnam will come tax-free, following the last round of negotiations between officials of Vietnam and U.S. negotiators.
/*Economic Interests*/
Trump also announced his agreement as a great deal of cooperation with Vietnam Communist Party General Secretary To Lam continuously as the first official visit to Vietnam by a US president. Vietnam, a country that is ranked eighth on the list of trading partners of the U.S., exported goods worth $137 billion in 2024 and imported only $13 billion worth of products from this country. A 20 percent tariff is imposed on Vietnamese exports, and a high 40 percent tariff on products that are transshipped to ensure avoidance of higher tariffs in China. Importantly to the manufacturers in the U.S., particularly the SUV manufacturers, Trump highlighted reaching the market in Vietnam, but with the condition of having total access and not having to pay any tariffs. Also, Vietnamese companies were ready to purchase $2 billion of U.S. agricultural produce, such as peaches and nectarines
/*Global and Strategic Context and Impacts*/
The transaction is the third under the Trump mutual tariff system after acquiring deals with the U.K. and China. It is considered a trial case of his wider policy that would minimize the trade imbalance and force other partners to bargain. Even former U.S. Assistant U.S. trade Negotiator Wendy Cutler is warning that some sticky issues remain, with rules of origin and coordination of supply chains at the top of the list. The critics say that the U.S. can end up taxing American firms that use Vietnamese manufacturing, like Apple and Nike, whose tariff is structured in that way as well.
/*The Vietnamese View and the Internal Response*/
Vietnam swiftly reacted to the declaration by Trump because the prime minister of Vietnam, Pham Minh Chinh, and state media acknowledged that it was necessary to recognize the market economy and remove restrictions on the export of high technology, an essential requirement in Hanoi. Vietnam is also struggling to maintain the economic dependency it has with China (the largest provider of inputs) as well as with the U.S., its biggest export market. This week, the negotiations culminated and were led by Deputy Prime Minister Nguyen Hồng Diên. Industry leaders in Vietnam-- which is highly dominated by domestic industry-- are still optimistically having their fingers crossed in anticipation of possible inflationary effects as a result of potential tariff changes.
/*What is Next and Broader Implications*/
In the eyes of U.S. legislators and the international market, the general focus will be to ensure that this agreement is the key to unlocking a broader roadmap, especially when India and the EU trade negotiations are underway. The reaction on the financial markets was expressed by a weak positive tone to Asia-Pacific equities. Should this yet to be enjoyed by many elements of this so-called framework deal materialize, then this would be a major turning point in the U.S.-Vietnam relations, strengthen economic ties, and offer up a brand new paradigm of the Trump trade priorities.