President Donald Trump announced Wednesday that the United States will impose a 20% tariff on imports from Vietnam, following a newly reached trade agreement negotiated at the last minute.
Goods imported from Vietnam to the U.S. previously faced a 46% levy, which was slated to take effect next week as part of Trump’s “reciprocal” tariffs announced earlier this year in April.
Numerous other economies, including the European Union and Japan, are reportedly working to finalize their own trade agreements with the U.S. before the proposed increases are implemented.
According to Trump, Vietnam will eliminate tariffs on U.S. products under the terms of the agreement, as stated in a social media post.
Tariffs, defined as taxes on imports, are typically paid by the company purchasing the goods, rather than the manufacturer.
While importers may choose to absorb the additional cost, they often pass it on to consumers. Many U.S. trading partners are concerned that this will reduce demand for their domestically produced goods.
In what Trump termed the “Great Deal of Cooperation,” the U.S. will also introduce a higher 40% tariff on goods that pass through Vietnam, a practice known as “trans-shipping.”
Peter Navarro, Trump’s senior advisor on trade and manufacturing, has previously indicated that a substantial portion—around a third—of Vietnamese exports to the U.S. are actually Chinese products routed through Vietnam.
The president stated on social media: “Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade.”
“In other words, they will ‘OPEN THEIR MARKET TO THE UNITED STATES,’ meaning that we will be able to sell our product into Vietnam at ZERO Tariff.”
Vietnam has emerged as a significant manufacturing center for major brands, including Nike, Apple, Gap, and Lululemon. It had benefited from companies relocating factories from China to avoid the tariffs Trump initiated during his first term.
Share prices of companies manufacturing goods in Vietnam initially increased following the announcement of the deal, though gains were reduced upon learning that products would still be subject to a 20% tax.
Vietnam’s General Secretary To Lam held a phone call with Trump on Wednesday, where he reiterated an invitation for the U.S. president to visit the country.
In separate developments, the Trump family has recently announced development projects in Vietnam.
The Vietnamese government has approved a plan by the Trump Organization and local business Kinh Bac City Development to invest $1.5 billion in hotels, golf courses, and luxury real estate.
The Trump Organization is reportedly also exploring locations for a Trump Tower in Ho Chi Minh City.
Trump initially imposed significant levies on trading partners worldwide in April, citing a lack of “reciprocity,” but subsequently announced a temporary reduction, lowering them to 10%.
According to the White House, many countries then approached the U.S. to negotiate trade agreements.
Since April, Washington has so far only announced a pact with Britain and a deal to temporarily lower retaliatory duties with China.
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