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Tariffs

Trump Announces Trade Deal with Vietnam, Imposes Tariffs on Vietnamese Exports

Strategic Insights

— 2 min read

President Donald Trump has announced a trade deal with Vietnam that would allow U.S. goods to enter the country duty-free, while Vietnamese exports to the United States would face a 20% levy. The announcement comes after Trump suspended a 46% tax on Vietnamese imports earlier this year to allow for negotiations. The trade agreement is seen as a significant development in the U.S.-Vietnam relationship, but some experts have expressed doubts about its implications for the two countries' trade dynamics. The United States has a significant trade deficit with Vietnam, running a $122 billion deficit last year.

Key Takeaways:

  • The trade deal would allow U.S. goods to enter Vietnam duty-free, while Vietnamese exports to the U.S. would face a 20% levy.
  • The 20% tariff on Vietnamese exports is lower than the 46% tax on Vietnamese imports that Trump announced earlier this year.
  • The trade agreement is part of Trump's efforts to target countries with which the United States runs trade deficits.
  • Mary Lovely, senior fellow at the Peterson Institute for International Economics, doubts that Trump can impose such a lopsided agreement on big trading partners like the European Union and Japan.
  • A 40% tax would be imposed on "transshipping" — goods from another country that stop in Vietnam on their way to the United States.
  • William Reinsch, a former U.S. trade official, notes that the significance of the transshipment crackdown will depend on "how the term is defined and enforced."
  • Vietnam was a beneficiary of American efforts to counter China's influence, with companies looking to diversify their supply chains away from China flocking to the country.

Statistics:

  • The United States ran a $122 billion trade deficit with Vietnam last year, the third-largest U.S. trade gap behind the ones with China and Mexico. (Source: Washington complains that Chinese goods have been dodging higher U.S. tariffs by transiting through Vietnam.)
  • A $1.5 billion project by the Trump Organization and a local partner to build a massive golf resort complex near Hanoi, covering an area roughly the size of 336 football fields, was reported in May. (Source: Vietnam reported a $1.5 billion project by the Trump Organization and a local partner.)
  • In 2023, Vietnam became the only country to host both President Joe Biden and Chinese leader Xi Jinping on state visits. (Source: Vietnam became the only country to host both President Joe Biden and Chinese leader Xi Jinping on state visits in 2023.)
  • The U.S. upgraded Vietnam to its highest diplomatic status—comprehensive strategic partner—placing it on par with China and Russia in 2023. (Source: The U.S. upgraded Vietnam to its highest diplomatic status—comprehensive strategic partner.)

Sources:

  • The Associated Press (Washington, AP) — April 2023
  • The Associated Press (Hanoi, AP) — May 2023
  • The Peterson Institute for International Economics (Mary Lovely, senior fellow)
  • Center for Strategic and International Studies (William Reinsch, former U.S. trade official)

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