President Donald Trump announced on Wednesday that the United States has reached a trade agreement with Vietnam, which includes a 20% tariff on imports from Vietnam to the US.
Trump’s announcement on Truth Social said that the deal will give the U.S. tariff-free access to Vietnam’s markets, News.Az reports, citing CNBC.
Vietnam also agreed that goods would be hit with a 40% tariff rate if they originated in another country and were transferred to Vietnam for final shipment to the United States.
The process, known as transshipping, is used to circumvent trade barriers. China, a top exporter to the U.S., has reportedly used Vietnam as a transshipment hub.
Trump wrote that “Vietnam will pay” that 20% duty, but tariffs are taxes on foreign goods that are paid by the importers of those products.
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.
Under that protectionist trade scheme, Vietnamese imports to the U.S. were subject to a 46% blanket tariff.
The S&P 500 rose slightly on news of the trade deal. But apparel companies that rely on Vietnam’s manufacturing capacity could face higher import costs under the new tariff rate.
It was unclear from Trump’s post when the deal will take effect, or if it has been officially signed by both parties.
Trump has signaled that he may ignore or revise the upcoming deadline for his reciprocal tariffs to snap back higher. The 90-day pause, which lowered tariffs on nearly all other countries to a blanket 10% rate, was imposed in early April to give countries breathing room while they negotiated deals with the U.S.
With the deadline approaching, the Trump administration has only struck revised trade frameworks with China and the United Kingdom, though it has repeatedly said the U.S. is close to deals with numerous other countries.
Vietnam, whose exports to the U.S. reportedly comprised 30% of its gross domestic product last year, is especially vulnerable to Trump’s tariffs.
