US and Vietnam Reach Trade Agreement, Lowering Reciprocal Tariffs

The United States has struck a trade agreement with Vietnam, which will lower Washington's "reciprocal tariff" on exports from the Asian country to 20 per cent. This represents a significant reduction from the 46 per cent levy initially imposed on Vietnam during President Trump's "liberation day" tariff blitz on April 2. The deal makes Hanoi one of the few capitals to reach a trade agreement with Washington in the past three months, but the remaining tariff levels may unnerve countries still hoping to secure significant relief from the president's levies. Vietnam's state media reported that the two sides reached a consensus on a "fair and balanced reciprocal trade agreement framework" during a phone call between President Trump and Vietnam's Communist party chief To Lam.

Key Takeaways:

• The US has agreed to lower its reciprocal tariff on Vietnamese exports to 20 per cent, a reduction from the initial 46 per cent levy.
• The deal makes Hanoi one of the few capitals to reach a trade agreement with Washington in the past three months.
• Vietnam's Communist party chief To Lam held a phone call with Trump on Tuesday and the two sides reached a consensus on a "fair and balanced reciprocal trade agreement framework".
• The US will charge Vietnam a 40 per cent tariff on "trans-shipping" as Washington seeks to crack down on businesses sending products made in China through other countries to avoid high levies on Chinese goods.
• Vietnam's state media reported that the country's exports to the US have risen in recent years as manufacturers moved production out of China to avoid US tariffs.
• In 2024, the US exported $13.1bn in goods to Vietnam, but imported $136.6bn in the same period.
• The US has accused Vietnam of being a conduit for Chinese exporters trying to avoid punitively high US tariffs on Beijing.