Trump announces new trade deal with Vietnam, reduces tariffs
What's the story
US President Donald Trump has announced a new trade deal with Vietnam, reducing tariffs on many of the Southeast Asian country's exports. The agreement was reached after last-minute negotiations and comes as part of Trump's effort to renegotiate tariffs with several countries around the world. Under the new deal, goods from Vietnam will now face a 20% tariff, down from the 46% levy Trump had proposed in April.
Market access
'TOTAL access' to Vietnam's markets for trade
In return for the reduced tariffs, Vietnam has agreed to give the US "TOTAL ACCESS" to its markets for trade. This means that US products will be allowed into Vietnam without any tariffs. Trump specifically mentioned sport utility vehicles (SUVs) as a product that would see increased exports under this agreement. However, details of how this arrangement will work are still unclear.
Trade imbalance
Trade imbalance favoring Vietnam
Since the US lifted its economic embargo on Vietnam in 1994, trade between the two countries has grown significantly. By 2024, bilateral trade reached $149.6 billion, a nearly 50-fold increase since 2002. However, this has resulted in a huge trade imbalance favoring Vietnam with a US trade deficit of over $123.5 billion in 2024 and $39.1 billion in Q1 of 2025.
Economic impact
Vietnam's 2025 growth target and US's concerns
Vietnam has set an ambitious 8% growth target for 2025. However, a report by the Asian Development Bank indicated that reciprocal tariffs of 20% or higher from the US could impact this target. In light of these developments, US officials have been urging Vietnam to address non-trade barriers and illegal transshipments while further opening its market to American goods and services.