US and Vietnam reach initial tariff deal
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Politico | 2 July 2025
US and Vietnam reach initial tariff deal
By Phelim Kine, Megan Messerly, Daniel Desrochers and Ari Hawkins
The U.S. has notched a preliminary trade deal with Vietnam, President Donald Trump announced Wednesday morning.
According to Trump, Vietnam will pay a 20 percent tariff on all imports into the U.S. and a 40 percent tariff on goods that are shipped through Vietnam from other countries. While that’s a lower tariff rate than Trump initially threatened with his reciprocal tariffs, it would mark a higher rate than Vietnam experienced during the three-month pause.
In exchange, Vietnam has committed to opening up its market to a variety of U.S. imports that Hanoi has traditionally blocked, according to a draft joint statement obtained by POLITICO.
The transshipment issue is a key Trump priority: White House trade adviser Peter Navarro has called Vietnam a “colony of China” for allegedly relabeling Chinese goods for export to the U.S., thereby allowing China to avoid much steeper tariffs on its exports.
“I just made a Trade Deal with Vietnam,” Trump posted on Truth Social on Wednesday morning. “Details to follow!”
Trump said he spoke with Vietnam’s top leader To Lam on Wednesday morning, calling him “an absolute pleasure” to deal with.
The Vietnam agreement is the first the Trump administration has inked to suspend his threatened “reciprocal” tariffs of between 20 and 50 percent, which are scheduled to kick in July 9. The White House previously reached a deal framework with the United Kingdom, which was not subject to those tariffs, as well as an agreement with China to pause triple-digit tariffs until August.
The White House had promised dozens of such deals with countries facing the higher tariffs, but as the deadline approaches, Trump and his top advisers have hinted that they may extend the deadline for some of the negotiations.
The draft of the agreement with Vietnam says the two sides will continue to work on a final deal to be sealed “within the coming weeks” that will result in a “substantial reduction” in the U.S. tariffs on Vietnam’s imports, though the draft statement did not include any details on where the tariff level will ultimately end up, unlike Trump’s social media post. Those tariff reductions will apply to a range of Vietnamese imports including tech products, footwear, agricultural commodities and consumer products including toys, the statement said.
That would throw a lifeline to Vietnam’s export sector, which relies heavily on the U.S. market and would effectively be priced out by a 46 percent tariff.
The draft implicitly references the U.S. demand that Hanoi reduce its role as a transhipment hub for Chinese-produced products, which constitute 40 percent of Vietnam’s imports.
Under the draft framework agreement, the U.S. and Vietnam will “establish favorable rules of origin” of each other’s imports to reduce the transhipment of Chinese products, but it provides no details. It also says that Vietnam will address non-tariff barriers like intellectual property enforcement.
Vietnam would also “provide preferential market access” for both agricultural products including poultry, pork and beef as well as unspecified industrial goods, according to the draft. Meanwhile, Hanoi is poised to confirm a long-mooted $8 billion dollar purchase of 50 Boeing aircraft and existing memoranda of understanding to purchase $2.9 billion in U.S. agricultural products, the statement said.
The statement does not include a timeline for further trade talks, nor does it include any China-specific language, as some China hawks in the U.S. have been advocating.
The terms of the deal could have sweeping implications for how other countries in Asia approach talks. Other countries in the region are unlikely to accept any terms they view as inferior to Vietnam’s, said one diplomat who is leading negotiations for a separate Asian country.
