Vietnam to sign agriculture deals with US worth $2 billion
Vietnam is expected to sign deals with the United States to buy more than $2 billion worth of agricultural products, Hanoi said Tuesday, as it tries to slash President Donald Trump's threatened 46 percent tariff.
The announcement came as a delegation from the Ministry of Agriculture and Environment led by Minister Do Duc Duy visited the United States.
Vietnam has the third-biggest trade surplus with the United States of any country after China and Mexico and is anxious to address the imbalance to head off the tariff threat.
The deals announced Tuesday include five memorandums of understanding to buy products worth around $800 million from the state of Iowa over three years, the agriculture ministry said in a statement on its website.
This is up from the current average of $44 million of agricultural exports per year from Iowa to Vietnam, the statement said.
The new deals include the purchase of soybean meal, corn, wheat, dried soybeans and dried distillers grains , it added.
Vietnam is due to head into a third round of trade talks with the United States in the coming days.
Last month it said "positive progress" has been made following three days of discussions in Washington.
The Vietnamese team sought help during its time in the United States from US tech and industry giants, including Lockheed Martin, SpaceX and Google.
It also signed an agreement with US company Westinghouse Electric on nuclear power development.
Trump's real estate group broke ground last month in Vietnam on a $1.5-billion luxury resort and golf course 40 kilometres southeast of the capital Hanoi.
His son, Eric Trump, an executive vice president of The Trump Organization, and his wife Lara attended the event, as well as local partner the Kinhbac City Development Corporation .
He has also been scouting locations for a potential tower project in Ho Chi Minh City, Vietnam's southern business hub.
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This assumes greater significance for energy, infrastructure, and manufacturing, which are sensitive to international trade dynamics and supply chain disruptions. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Collagen is not needed, 42-year-old woman's skin changes URUHIME MOMOKO Learn More Undo The Court of International Trade struck down President Donald Trump's sweeping ' Liberation Day ' tariffs, ruling that he lacked the 'unbounded authority' to impose across-the-board import taxes on the entire world under the International Emergency Economic Powers Act. These concerns have been exacerbated by President Donald Trump's 1000-page ' Big, Beautiful Bill .' While the Bill is ' big ,' there have been concerns about its ' beautiful ' nature due to a hike in the USA's already bloated and unsustainable deficit resulting from extended tax cuts and an aggravated skew in the distribution of income and wealth. The US grew by 2.8 % in 2024. 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Shared prosperity necessitates a more connected, secure, and efficient trading environment - an environment marked by strong standards and international cooperation. Major central banks, including the US Federal Reserve , the European Central Bank, and the Bank of England, are expected to adopt a dovish stance, keeping interest rates low to bolster languishing economic growth. The Indian Macroeconomy India's economy rose 7.4% in Q4 of FY 2025, exceeding expectations, despite heightened global uncertainties. This is the strongest quarterly growth in FY 25, accelerating from 5.6 % growth in Q2 and 6.4% in Q3. India's GDP growth rose 6.5% in FY 25, the lowest in four years (9.2 % in FY 24 and 7.6 % in FY23). The growth outlook in Asia's third-largest economy remains relatively robust, making it the world's fastest-growing major economy again, thanks to strong domestic consumption, government investments, and a relatively lower dependence on exports. 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While external uncertainties, such as supply chain disruptions and energy market volatility, pose challenges, India continues to benefit from demographic dividend, ascendant middle class, huge markets with rising consumption demand, strong service sector performance, an accent on infrastructure and capex, a stable banking system, and improving manufacturing output under schemes like PLI. External sector risks, tariff disputes, ease of doing business, credit delivery to the target group, tax reforms, and expenditure rationalization, however, cause some concern. Bank Credit Credit growth is expected to remain robust, driven by economic growth, consumption, and investment. Bank credit moderated to 11.2 % as on April 18, 2025, compared to 15.3 % in the previous year. Bond Yields Domestic bond yields fell to multi-year lows because of successive rate cuts and liquidity-boosting measures by the RBI . Both credit and monetary conditions are in sync with the RBI's plan to support the economy while containing inflation. Liquidity Liquidity remains volatile because of advance tax and GST outflows and government cash balances with the RBI. Liquidity remained in surplus as reflected in average daily net absorption under the liquidity adjustment facility (LAF), increasing to ₹1,605 crore during FY 25 from ₹485 crore in FY 24. The RBI conducted market operations, including open market operations (OMO) purchases, USD/INR buy/sell swaps, and longer tenor variable rate repo (VRR) operations, besides reducing the CRR by 50 bps (in two tranches of 25 bps each), to provide durable liquidity to the system. The RBI transferred ₹2.69 lakh crore surplus to the government. Inflation Inflation remained within the target in FY 25, aided by easing vegetable prices. Headline inflation moderated to 4.6 % during FY 25 from 5.4 % in the previous year, largely driven by moderating core (CPI excluding food and fuel) inflation to 3.5 % and deflation in fuel at 2.5 %. However, the rise in core inflation in the second half of the year occurred because of surging global gold prices. Other tailwinds are above normal monsoon, early arrival of the southwest monsoon, elevated reservoir level, favourable rainfall outlook, and softening food inflation. Crude prices are expected to remain volatile because of global demand, supply disruptions, and geopolitical tensions. CPI inflation softened to 3.2 % in April, the lowest since July 2019, from 3.3 % in March because of a sustained fall in food prices. CPI inflation is expected to remain range-bound, driven by factors such as food prices, fuel prices, and economic growth. With benign inflation (inflation remaining below the 4 % from February to April 2025) and plunging inflation, the CPI is likely to durably align with the 4 % target over 2 months, inducing the RBI to cut policy rates by 25 bps to 5.75 % in June. A downward bias in FY26 CPI inflation will be symptomatic of the depth of the rate-cutting cycle. CPI is expected to moderate from 4.9% in FY25 to 4.3% in FY26. However, inflationary risks persist because of global commodity prices and any escalation in geopolitical tensions. Under the flexible inflation targeting (FIT) framework, the RBI has been mandated by the government to maintain CPI at 4 % with a band of +/-2 %. Decelerating inflation and moderate growth warrant ' monetary policy to be growth supportive, while remaining watchful about the rapidly evolving global macroeconomic conditions ' (RBI's Annual Report for 2024-25). Revised GDP and inflation forecasts The RBI is likely to revise its projections on real GDP and inflation for FY26. Rate Action The RBI has already cut the Repo Rate twice in 2025- in February and in April, by 25 bps each. These cuts reduced the key lending rate to 6%. Further, the RBI also changed its stance from 'neutral' to 'accommodative' in April. Accordingly, most banks reduced their repo-linked lending rates. Lenders also lowered their marginal cost of funds-based lending rate (MCLR), with a beneficial impact on interest-rate sensitive segments, viz., real estate, small businesses, and home loans. A further 25-bps cut in the Repo Rate will drive economic traction, promote borrowing, investment, and growth, and enhance job creation by making it cheaper for people to borrow money. A 25-bps reduction in the Repo Rate will cause a corresponding drop in all external benchmark lending rates (EBLR), with equated monthly installments (EMIs) on home and personal loans decreasing by 25 bps. A boost in real estate will have a multiplier effect on the economy, particularly in sectors like cement, steel, and construction equipment. This would be the third consecutive reduction in the Repo rate since February 2025. Since inflation is within the RBI's target band, and given the likely growth-inflation dynamics, we expect another reduction of 50 bps in FY26. Policy Stance The MPC is likely to retain the 'accommodative' monetary policy stance adopted in April 2025. (The author is Chief Economist, Infomerics Valuation and Ratings) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
