U.S.-Vietnam Trade Pact Aims to Counter China, Rebalance Commerce

The United States and Vietnam have agreed on a framework for a landmark trade deal aimed at boosting bilateral commerce and addressing longstanding market access challenges, according to a joint statement released by the White House on October 26. The Framework for an Agreement on Reciprocal, Fair, and Balanced Trade seeks to strengthen economic ties by granting U.S. exporters preferential access to Vietnam's market while maintaining a 20% reciprocal tariff on Vietnamese goods, according to a USTR fact sheet. The agreement builds on the 2001 U.S.-Vietnam Bilateral Trade Agreement and marks a significant step in recalibrating trade relations under President Donald Trump's broader strategy to secure favorable terms with Southeast Asian partners, as reported by the VIR article.

Key terms of the deal include Vietnam's commitment to remove tariffs on nearly all U.S. industrial and agricultural exports, while the U.S. will designate certain products—such as coffee, nutmeg, and pineapples—for duty-free access, as described in the USTR fact sheet. The framework also addresses non-tariff barriers, with Vietnam agreeing to accept U.S. vehicle safety and emissions standards, streamline regulatory approvals for pharmaceuticals, and enhance intellectual property enforcement, China Daily Asia reported. Additionally, both nations pledged to collaborate on supply chain resilience and export controls, reflecting concerns over global trade dynamics and competition with China.

The White House highlighted the deal's potential to reduce the U.S. trade deficit with Vietnam, which reached $123.5 billion in 2024, according to the USTR fact sheet. Vietnamese officials emphasized the agreement's role in supporting digital transformation and infrastructure development, with Prime Minister Huynh Quang Liem stating that the Nokia partnership to upgrade radio networks exemplifies Vietnam's commitment to modernizing its economy.

Market reactions to the deal have been mixed. While U.S. agricultural groups welcomed the expanded access to Vietnam's growing consumer base, companies like Deckers, which sources footwear from Vietnam, face ongoing challenges from Trump's 20% and 40% tariffs on Vietnamese imports. The tariffs, part of Trump's broader trade strategy, have weighed on consumer demand for discretionary goods, with Deckers' shares down nearly 50% this year.

The U.S.-Vietnam framework is part of a broader push to solidify trade relationships across Southeast Asia. In the same week, Trump announced similar deals with Thailand, Malaysia, and Cambodia, aiming to counterbalance China's influence in the region, Supply Chain Dive reported. The agreements, which maintain 19% reciprocal tariffs on goods from Thailand, Malaysia, and Cambodia, include commitments to remove non-tariff barriers and expand market access for U.S. agricultural products, according to Channel NewsAsia.

However, uncertainties remain. The U.S. Supreme Court will soon hear arguments on whether Trump's use of tariffs to leverage trade deals is legal, as reported by Capital Press, and details on transshipment rules—critical for preventing goods from China from evading tariffs—remain unresolved, Bloomberg notes. Meanwhile, Vietnamese exporters are adapting to the new U.S. tariffs by diversifying their strategies, with some viewing the changes as an opportunity to strengthen long-term partnerships, as described in the China Daily Asia piece.

With domestic formalities still pending, the U.S. and Vietnam plan to finalize the agreement in the coming weeks, according to the VIR article. The deal's success will hinge on its ability to deliver tangible benefits to businesses and consumers while navigating the complex geopolitical landscape of U.S.-China trade tensions.

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