On July 2, 2025, President Donald Trump announced a trade deal with Vietnam, finalized just before a July 9 deadline when higher tariffs were set to resume. This agreement, described as a framework by Vietnamese state media, aimed to address trade imbalances and transshipment concerns while fostering reciprocal market access. The deal was struck after negotiations prompted by Vietnam’s large trade surplus with the U.S. and its role in rerouting Chinese goods to evade U.S. tariffs. Below is an outline of the deal’s key components and how it differs from prior tariffs.Key Components of the June 2, 2025, U.S.-Vietnam Trade Deal
- Tariff Rates on Vietnamese Exports:
- The U.S. imposed a 20% tariff on all Vietnamese goods imported to the U.S., a significant reduction from the 46% reciprocal tariff initially announced on April 2, 2025. Additionally, a 40% tariff applies to goods transshipped through Vietnam, particularly targeting Chinese products relabeled as Vietnamese to bypass higher U.S. duties.
- U.S. Market Access to Vietnam:
- Vietnam agreed to eliminate tariffs on U.S. goods, granting “total access” to its markets. This allows U.S. products, such as large-engine vehicles, agriculture, and energy exports, to enter Vietnam duty-free, a significant concession aimed at reducing Vietnam’s trade surplus with the U.S.
- Transshipment Crackdown:
- The deal addresses U.S. concerns about Vietnam being a conduit for Chinese goods. Vietnam committed to stricter controls on transshipment, ensuring goods labeled “Made in Vietnam” have significant local value-added production. This responds to allegations that Chinese products were rerouted through Vietnam to evade U.S. tariffs.
- Strategic and Economic Goals:
- The agreement strengthens U.S.-Vietnam economic ties, leveraging Vietnam’s role as a manufacturing hub amid the U.S.-China trade war. It aims to reduce Vietnam’s $123 billion trade surplus with the U.S. (2024 data) and supports U.S. exporters by opening Vietnam’s market.
Differences from Previous Tariffs
- Pre-Deal Tariff Structure:
- Before April 2025, U.S. tariffs on Vietnamese goods were relatively low, averaging around 3.3% under World Trade Organization (WTO) most-favored-nation (MFN) rates. Vietnam’s exports, worth $137 billion in 2024, faced minimal duties, making it a key destination for companies diversifying from China.
- April 2025 Reciprocal Tariffs:
- On April 2, 2025, Trump imposed a 46% reciprocal tariff on Vietnamese imports, citing Vietnam’s alleged 90% tariffs on U.S. goods (disputed by WTO estimates of 9.4%) and its trade surplus. This was part of a broader policy targeting countries with high trade surpluses, paused for 90 days from April 9, reducing tariffs to a blanket 10% during negotiations.
- Key Changes in the July Deal:
- The 20% tariff is a compromise, lower than the 46% but double the 10% interim rate, balancing U.S. protectionism with Vietnam’s economic reliance on exports. The 40% transshipment tariff is a new measure, absent in prior frameworks, targeting Chinese goods specifically. Vietnam’s zero-tariff commitment to U.S. goods marks a sharp departure from its previous 9.4% average tariff, enhancing U.S. export competitiveness.
- Economic and Strategic Impact:
- Unlike earlier tariffs, which lacked negotiation flexibility, the July deal reflects Vietnam’s concessions, including market access and transshipment controls, to avoid economic disruption. It contrasts with the April tariffs’ punitive approach, aiming for a “reciprocal, fair, and balanced” trade relationship
