Trump announces trade deal with Vietnam, 40% levy on transshipments

U.S. President Donald Trump announced in a Truth Social post that he has finalised a trade deal with the Socialist Republic of Vietnam, "after speaking with To Lam, the Highly Respected General Secretary of the Communist Party of Vietnam.

"It will be a great deal of cooperation between our two countries."

The terms, according to Trump, are that Vietnam will pay the United States a 20 percent tariff on any and all goods sent into "our territory, and a 40 percent tariff on any transshipping. In return, 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.

"It is my opinion that the SUV or, as it is sometimes referred to, large engine vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam.

"Dealing with General Secretary To Lam, which I did personally, was an absolute pleasure."

U.S. goods trade with Vietnam totaled an estimated $149.6 billion in 2024, according to data from the US Trade Representative.

"U.S. goods exports to Vietnam in 2024 were $13.1 billion, up 32.9 percent ($3.2 billion) from 2023. U.S. goods imports from Vietnam totaled $136.6 billion in 2024, up 19.3 percent ($22.1 billion) from 2023. The U.S. goods trade deficit with Vietnam was $123.5 billion in 2024, an 18.1 percent increase ($18.9 billion) over 2023."

U.S. trade deficit with Vietnam, as of May 2025, was $65 billion (imports of $70.5 billion and exports of $5.7 billion), according to data from the United States Census Bureau.

The agreement was unveiled less than a week before a 90-day pause on many of Trump’s so-called reciprocal tariffs was set to expire, sending U.S. duties on imports from dozens of countries soaring, CNBC reported.

"Under that protectionist trade plan, Vietnamese imports to the U.S. were subject to a 46 percent blanket tariff. That rate was lowered to 10 percent during the 90-day interim. Raising the tariff on Vietnamese goods to 20 percent will hike costs for U.S. importers, which could be passed on to consumers or suppliers."

Vietnam air and ocean import weight is about one quarter of what China exports to the U.S., according to Frederic Horst, Managing Director, Trade and Transport Group. "Overall Chinese air imports are running at about 80,000 tonnes per month (excluding low value e-commerce traffic which is probably another 100,000 per month). The rest of Asia air trade to the U.S. is about 80,000 as well. Note the spike from Vietnam to the U.S. in March, April and May."

Trade from China to Vietnam increased 19 percent in the first five months of this year, while full year 2024 growth was about 16 percent, Horst added. "China – Vietnam exports are about 2.5 x 2018 levels. But imports into China from Vietnam are about 1.8 x higher. Most of the growth in the last 1.5 years has been in China exports to Vietnam.

"A 20 percent tariff on goods from Vietnam is still significant (although nowhere near the reciprocal 46% tariff rate that was announced in April.)"

Air freight capacity and rates remain stable from Vietnam, according to the latest update from Dimerco.

"However, the 90-day suspension of the 46 percent U.S. tariff on Vietnamese exports is set to expire on July 9 unless a new agreement is reached. As a result, airfreight rates may rise in early July. While rates are currently steady, they remain subject to change depending on space availability. Regular monitoring is recommended."

Consumer electronics products are at the top of the year-to-date 2025 (through April) imports from Vietnam to the U.S., especially personal computers and earbuds/headphones, writes supply chain professor Jason Miller on LinkedIn.

"Footwear is very high on the list, as are various wooden furniture types. Rounding out the top products are apparel items, toys, metal furniture, and solar cells.

"Implication: 20 percent broad-based tariffs above the MFN rate on goods from Vietnam are certainly an interesting development - the attractiveness of Vietnam at 20 percent versus China at 30 percent for many goods will pose an interesting global sourcing decision. I'll be curious what the formal definition of transshipment ultimately turns out to be."

Vietnamese manufacturing in many sectors, Miller adds, is heavily based on "processing trade" whereby inputs from elsewhere (especially China) are assembled into finished products for export to the U.S. "Many additional questions require answering."

For Indian exporters eyeing Vietnam as a competitor and partner in regional value chains, the deal presents both cautionary lessons and strategic implications, according to the latest update from Global Trade Research Initiative (GTRI).

"For India, the timing of this deal is critical. The GTRI report cautions Indian negotiators, who are in the final stages of their own trade talks with the U.S. to learn from Vietnam's experience, especially the risks of sudden reversal of tariffs, unclear rules on product origin and flat duty structures," Times of India reported.