US Announces Trade Deal with Vietnam Ahead of July 9 Tariff Reset

Michael Faulkender, the US Deputy Treasury Secretary, hinted at upcoming trade deal announcements, suggesting that several agreements and tariff changes are likely to be revealed next week. This development carries significant implications for global financial markets, as market volatility could arise, particularly affecting US Treasury yields and international indices.

Faulkender's remarks underscore the potential impact on supply chains and global financial flows. The negotiations on trade deals and tariffs could influence risk sentiment and market dynamics, with historical trends showing links between such announcements and market volatility, especially for the USD and international equities.

The announcement of these trade deals could have a profound effect on financial and economic policies. Market fluctuations similar to previous occasions may arise, given the potential impact on tariff rates and trade agreements. If digital assets or crypto exchanges are mentioned, a shift in investor behavior could occur, as significant economic news can affect BTC, ETH, and stablecoins due to changing risk appetites.

Data and historical precedents indicate potential trade deal impacts on global markets. With probable effects on tariffs and risk sentiment, indirect influences on cryptocurrencies may occur if trade agreements include digital asset considerations.

The US Deputy Treasury Secretary, Michael Faulkender, announced that the Trump administration is set to unveil several trade deals by the following week. This announcement comes as the administration shifts its focus towards more tactical, sector-specific trade negotiations, aiming to secure policy wins ahead of the July 9 tariff reset. The administration's strategy involves pursuing smaller, phased trade deals rather than comprehensive agreements, reflecting a sense of urgency to achieve tangible results.

President Donald Trump revealed that the United States has reached a trade agreement with Vietnam, marking the second limited deal after threats of steep tariffs. The deal allows U.S. goods to enter Vietnam duty-free, while imposing a 20% tariff on Vietnamese exports to the U.S. and a 40% tariff on goods originating from other countries and transferred through Vietnam before entering the U.S. This agreement is expected to benefit U.S. commodities such as fruits, nuts, pork, and beef, which currently face higher tariffs.

Treasury Secretary Scott Bessent indicated that the U.S. is nearing a trade deal with India, adding to the list of countries with which the administration is negotiating. Bessent's comments suggest that the U.S. is actively pursuing multiple trade agreements simultaneously, aiming to finalize key deals before the July 9 tariff reset. The administration's approach of focusing on sector-specific negotiations allows for more targeted and strategic trade agreements, potentially leading to quicker policy wins.

The trade deal with Vietnam is seen as a potential catalyst for further trade agreements, with some analysts suggesting that more deals could be announced ahead of the July 9 deadline. The Vietnam deal is expected to benefit U.S. exports of fruits, nuts, and horticulture products, which face tariffs ranging from 15% to 20%.

The trade agreement with Vietnam is also expected to boost U.S. protein exports, including dairy and meat products. U.S. dairy exports to Vietnam have shown strong growth, with increases in nonfat dry milk powder, whey, and lactose. Meat exports to Vietnam in 2024 included 5,052 metric tons of beef and beef variety meat valued at $43 million, and 4,662 metric tons of pork and variety meat with a value of $10 million. The U.S. is currently the fifth-largest exporter to Vietnam and the largest trading partner without a Free Trade Agreement (FTA). Tariff reductions could make U.S. pork more competitively priced compared to major competitors like Brazil, the European Union, and Canada, which currently have duty-free access to Vietnam.

Vietnam's growing population and middle class present significant opportunities for U.S. exports. With a population of 100 million and a growing demand for protein, Vietnam's limited soybean crushing capacity and dependence on soybean meal imports for livestock and aquaculture feed needs create potential for increased soybean exports from the U.S. The country's small soy processing industry, with only four plants importing 2 million tons of soybeans annually, could see growth in soybean exports to support Vietnam's expanding aquaculture and livestock production.