Global attention focused on Vietnam on Thursday after the United States and Hanoi announced a trade deal just days before Washington planned to reinstate full reciprocal tariffs. The agreement reduces the U.S. tariff on Vietnamese imports to 20%, down from the 46% imposed earlier this year, while American goods entering Vietnam will face no tariffs.
A notable element of the deal is Vietnam’s agreement to impose a 40% tariff on goods originating from other countries but routed through Vietnam for shipment to the U.S., addressing the practice of transshipping that China has reportedly used to avoid tariffs.
Vietnam is among the few countries to have secured a trade deal with the White House amid rising tariff tensions. Sebastian Raedler, head of European equity strategy at Bank of America, told CNBC, “What we learned from the Vietnam deal is, if anything, the tariffs are going to go up from here, not down.”
Mark Williams, chief Asia economist at Capital Economics, added that other countries might now negotiate lower rates, noting Vietnam’s weaker negotiating position due to its reliance on U.S. trade.
Economists at Citi expressed concerns for other emerging Asian markets, pointing out that the 20% tariff is higher than the expected 10% and that the 40% tariff on transshipped goods may affect countries like Thailand, Malaysia, and exporters with factories in Vietnam, such as South Korea.
While the deal suggests more agreements with Asian countries, the outlook for similar arrangements with the European Union is less optimistic.
Trade talks between the U.S. and EU have been slow, complicated by issues such as tech regulation and taxation. President Trump has proposed tariffs up to 50% on EU imports, while the EU has threatened countermeasures, currently paused.