Vietnam surprised by Trump's 20% tariff, moving to reduce it

Vietnam surprised by Trump's 20% tariff, moving to reduce it

Vietnam has been taken aback by President Donald Trump's announcement of a 20% tariff on its exports to the United States, a significant deviation from the preliminary agreement that the two sides were reportedly close to finalizing. The sudden change in tariff rates has left the Vietnamese government in a state of uncertainty and has raised questions about the reliability of the U.S. as a trading partner.

According to a report by Politico [1], the Vietnamese government had not agreed to the 20% tariff rate, believing it would be around 11%. The discrepancy emerged when Trump, in a phone call with Vietnamese General Secretary Tô Lâm, unilaterally raised the tariff rate to 20%. This move was unexpected and has caused surprise, disappointment, and anger within the Vietnamese government.

The White House has maintained that the Vietnamese government was aware of the top-line tariff rates before the call, but neither the White House nor Vietnam has released any documentation of the agreed terms. The lack of formal agreement or signed-off documentation has introduced an element of uncertainty, both for Vietnam and other U.S. trading partners [1].

The new tariff rate, which replaces the previously paused 46% reciprocal tariff, has significant implications for U.S. companies. Vietnam is now a more predictable and lower-risk production alternative to China, especially given the steep tariffs imposed on Chinese goods during Trump's first term. The 0% tariff on U.S. exports to Vietnam opens up new opportunities for U.S. manufacturers, performance brands, and specialty parts suppliers seeking to enter or expand sales in Southeast Asian markets [2].

However, the deal includes a caveat regarding transshipments. Goods that are rerouted through Vietnam by companies looking to reduce tariff costs will face a 40% transshipment tariff. Companies relying on Vietnam-based suppliers should evaluate their sourcing and manufacturing processes to avoid penalties [2].

The episode has raised concerns about the stability of U.S.-Vietnam trade relations. Regional experts worry that the move could undermine decades of effort to rebuild diplomatic ties after the Vietnam War and could benefit China in its influence over the region [1].

The U.S. has a July 9 deadline for additional tariff agreements with dozens of other countries, and the announcement of the new Vietnam deal comes as part of this effort. The uncertainty surrounding the tariff rates and the lack of formal documentation have highlighted the need for clear, fair standards and have raised questions about the credibility of the negotiators [1].

References:
[1] https://www.politico.com/news/2025/07/10/vietnam-trump-tariff-deal-00447715
[2] https://www.performanceracing.com/magazine/industry-news/07-07-2025/us-strikes-significant-trade-deal-vietnam