Trump Announces Trade Deal with Vietnam, Imposes 20% Tariff on Vietnamese Exports

Strategic Insights -

The United States and Vietnam have reached a trade deal, with U.S. President Donald Trump announcing on Wednesday that American goods would enter Vietnam duty-free. However, Vietnamese exports to the U.S. would face a 20 per cent levy. This agreement marks a significant shift from Trump's previous stance, which included imposing a 46 per cent tax on Vietnamese imports. The 90-day suspension of reciprocal tariffs, which was put in place to allow for negotiations, expires on Tuesday. Vietnam has been eager to escape the trade deficit, which stood at $122 billion last year, making it the third-largest trade gap for the U.S. behind China and Mexico. Mary Lovely, a senior fellow at the Peterson Institute for International Economics, expressed skepticism about the lopsided agreement, doubting that Trump could impose similar terms on big trading partners like the European Union and Japan.

Key Takeaways:

  • The U.S. and Vietnam have reached a trade deal, with U.S. goods entering Vietnam duty-free.
  • Vietnamese exports to the U.S. will face a 20 per cent tariff under the new agreement.
  • Trump had previously announced a 46 per cent tax on Vietnamese imports, one of his so-called reciprocal tariffs targeting countries with which the U.S. runs trade deficits.
  • The 90-day suspension of reciprocal tariffs, which allowed for negotiations, expires on Tuesday.
  • The Trump administration has only reached a trade agreement with one of the targeted countries, the United Kingdom, since imposing reciprocal tariffs.
  • Mary Lovely, senior fellow at the Peterson Institute for International Economics, expressed skepticism about the U.S. ability to impose similar terms on big trading partners.
  • The U.S. ran a $122-billion trade deficit with Vietnam last year, the third-largest trade gap after China and Mexico.
  • Trump has also reached a "framework agreement" with China in a separate trade dispute.

Statistics:

  • The U.S. trade deficit with Vietnam was $122 billion in 2022.
  • Vietnam's exports to the U.S. will face a 20 per cent tariff under the new agreement.
  • Trump imposed a 46 per cent tax on Vietnamese imports in April.
  • The 90-day suspension of reciprocal tariffs expires on Tuesday.
  • The U.S. has reached a trade agreement with only one of the targeted countries, the United Kingdom.
  • The U.S. ran a total of $122 billion trade deficit with Vietnam and China and Mexico in 2022.

Sources:

  • The Associated Press
  • Mary Lovely, senior fellow at the Peterson Institute for International Economics