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Donald Trump mentioned the US had struck a commerce settlement with Vietnam in a deal that may decrease Washington’s “reciprocal tariff” on exports from the Asian nation to twenty per cent.
The brand new tariff level represents a greater than halving of the 46 per cent levy Trump initially imposed on Vietnam throughout his “liberation day” tariff blitz on April 2, however is greater than the ten per cent charge it was lowered to for 90 days as commerce talks befell.
The deal makes Hanoi one of many few capitals to achieve a commerce settlement with Washington previously three months. However the steepness of the tariffs remaining in place might unnerve international locations nonetheless hoping to safe important aid from the levies introduced in April, which triggered a monetary market sell-off on the time and upended international commerce.
Describing the deal as “one thing that they’ve by no means executed”, Trump mentioned in a Fact Social publish on Wednesday detailing the settlement that Vietnam would give the US “TOTAL ACCESS” to their market and that “we will promote our product into Vietnam at ZERO Tariff.”
The US may also cost Vietnam a 40 per cent tariff on “trans-shipping” as Washington seeks to crack down on companies sending merchandise made in China via different international locations to keep away from excessive levies on Chinese language items.
Vietnam’s official state media reported that Vietnam’s Communist occasion chief To Lam held a cellphone name with Trump on Tuesday and the 2 sides reached a consensus on a “truthful and balanced reciprocal commerce settlement framework”.
In the course of the name, Trump “affirmed that the US will considerably cut back reciprocal tariffs on many Vietnamese exports”, state media reported, with out referring to any particular tariff charges.
“The 20 per cent baseline tariff for Vietnamese imports is greater than anticipated, undoubtedly inflicting angst amongst different buying and selling companions attempting to finalise offers,” mentioned Wendy Cutler, a former US commerce official who now serves as vice-president on the Asia Society Coverage Institute.
Hanoi, although, had a “sturdy curiosity” in reaching a cope with Washington given nearly 30 per cent of Vietnam’s exports are destined for the US, Cutler mentioned.
The south-east Asian nation’s exports to the US have risen lately as producers have moved manufacturing out of China to keep away from US tariffs, with Vietnam internet hosting the likes of Apple, Samsung and Nike. In 2024, the US exported $13.1bn in items to Vietnam, based on US authorities figures, however imported $136.6bn over the identical interval.
The Trump administration has accused Vietnam of being a conduit for Chinese language exporters attempting to keep away from punitively excessive US tariffs on Beijing. The apply, generally known as trans-shipment, had turn into a essential situation in Hanoi’s negotiations with Washington.
Many corporations assemble elements manufactured in China in different international locations together with Vietnam and its south-east Asian friends, or add sufficient worth to the merchandise to legally change their place of birth. Nonetheless, some merely relabel their merchandise with none added worth, a apply that’s unlawful however tough to hint.
Whereas the decrease tariffs supply some aid for Vietnam, it’s unclear how the two-tier tariff system introduced by Trump would work. Additionally it is unclear how Hanoi can hint trans-shipment and what number of its exports could be hit with the upper 40 per cent charge.
Alicia García-Herrero, chief Asia-Pacific economist at French funding financial institution Natixis, mentioned the 20 per cent flat tariff was “not too dangerous” for Vietnam as long as US tariffs on China remained comparatively greater.
“The query is whether or not there may be any fantastic print — for instance, Vietnam imposing tariffs on merchandise and inputs imported from China that are important to its manufacturing financial system,” she mentioned.
The cope with Vietnam comes a day after Trump threatened to increase levies on Japan, casting doubt that Washington would attain a cope with Tokyo.
Further reporting by Peter Foster in London
