Trump announces trade deal with Vietnam: US goods will enter tariff-free

Donald Trump has announced a trade agreement with Vietnam that would allow US products to enter the country tariff-free. However, Vietnamese exports to the United States will face a 20% tariff.

In his Truth Social platform, Trump declared the pact "a great cooperative agreement between our two countries."

In April, Trump announced a 46% tariff on Vietnamese imports, one of his so-called reciprocal tariffs targeting dozens of countries with which the United States has trade deficits. Trump quickly suspended the reciprocal tariffs for 90 days to allow for negotiations like the one with Vietnam.

The pause expires on Tuesday, but so far the Trump administration has only reached a trade agreement with one of those countries: the United Kingdom. Trump has also reached a "framework" agreement with China in a separate trade dispute.

"Vietnam has been very interested in getting out of this," said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. "This is basically forcing a smaller country to accept it. It's the big countries that everyone is focusing their attention on," she added. She doubted Trump could impose such an unequal deal on major trading partners like the European Union and Japan.

Last year, the United States had a $122 billion trade deficit with Vietnam . That was the third-largest U.S. trade deficit—the difference between the goods and services it buys from other countries and the ones it sells to them—behind those with China and Mexico .

In addition to the 20% tariffs, Trump said the United States would impose a 40% tax on "transshipment," goods from another country that stop in Vietnam on their way to the United States. Washington complains that Chinese goods have been evading higher tariffs by transiting through Vietnam.

A February study in the Harvard Business Review found that there was "much less diversion than previously believed."

In May, Vietnam approved a $1.5 billion project by the Trump Organization and a local partner to build a massive golf resort complex near Hanoi , covering an area roughly the size of 336 football fields.

Vietnam benefited from US efforts to counter China's influence. Companies seeking to diversify their supply chains away from China flocked to Vietnam.

In 2023, it became the only country to host both President Joe Biden and Chinese leader Xi Jinping on state visits. That year, the United States elevated Vietnam to its highest diplomatic status: comprehensive strategic partner, placing it on par with China and Russia.