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Trump said Wednesday the two sides agreed a deal that will see the US impose a 20% tariff on Vietnamese exports, with a 40% levy on any goods deemed to be transshipped through the country. Vietnam had agreed to drop all levies on US imports, he said.
Vietnam's Ministry of Foreign Affairs said Thursday that trade negotiators are still coordinating with their US counterparts to finalize the details of the deal.
While Trump's announcement of the broad contours of the deal provided some relief to businesses previously bracing for tariffs of as high as 46%, neither country has released fact sheets or published any kind of detailed outline yet.
Trump's announcement 'left us with a lot of questions,' said Ngo Sy Hoai, vice chairman and also general secretary of Vietnam Timber and Forest Product Association. 'We need more clarity to fully understand how this 20% tariff will be applied across different products and sectors,' he added.
Vietnam posed a particular challenge for the Trump administration, as some of the president's top advisers view the nation as a strategic partner in efforts to counter China in Asia. At the same time, its exports have become staples for American consumers.
The US is Vietnam's biggest customer and 'represents not just the most important export market but also its growth model,' said Trinh Nguyen, a senior economist at Natixis. The 20% tariff still makes producing in Vietnam much more attractive than China, so it will give an assurance that Vietnam is a country that prioritizes trade and is a relatively low cost place to do business, Trinh added.
China said it was examining the trade deal and would retaliate if its interests were hurt — a sign that tensions between Beijing and Washington risk worsening as more of the pacts are finalized.
The agreement with Vietnam was struck after weeks of discussions during which the US pressured the country to get tougher on trade fraud, ensure stricter enforcement against the transshipment of Chinese products, and also pushed for the removal of non-tariff barriers.
What's not clear is how the tackling of transshipment will be enacted or enforced. Vietnam is heavily reliant on China for the raw materials essential to maintain its manufacturing-driven growth and China accounted for approximately 38% of Vietnam's total imports last year, according to Vietnamese customs data.
Assessing the pros and cons is 'difficult without seeing further details about what the tariffs actually mean,' said Adam Sitkoff executive director of the American Chamber of Commerce in Hanoi. It raises questions over whether the 20% is on top of tariffs already in place, or if it's the total amount, and what the 40% applies to in practice. 'The answers to these questions can be the difference between celebrating or crying,' Sitkoff added.
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