U.S.-Vietnam Trade Deal Signals Harsher Tariff Future Under Trump Administration

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Daniel Ceng, Anadolu, Getty Images

As the countdown continues to the expiration of a 90-day temporary tariff reprieve, U.S. President Donald Trump has finalized a new trade agreement with Vietnam, setting the tone for future trade policy and raising concerns among global partners about escalating protectionism.

Under the deal announced Thursday, the United States will impose a 20% tariff on Vietnamese imports a significant reduction from the 46% tariff implemented earlier this year, but still twice the rate markets had expected. In return, Vietnam has agreed to levy a 40% duty on goods transshipped through its ports, a practice allegedly used by Chinese exporters to sidestep U.S. tariffs.

U.S. goods entering Vietnam will not face any tariffs, giving American exporters a competitive edge in Southeast Asia’s growing consumer market. The agreement, which was finalized just days before Trump’s temporary tariff suspensions expire on July 9, has left other countries scrambling to understand the implications for their own trade relationships with Washington.

President Trump touted the deal as a victory for American workers and a “strong step toward fair and reciprocal trade.” The White House emphasized that the agreement punishes countries engaging in transshipping practices while rewarding those willing to negotiate directly with the U.S.

“This is about putting American interests first,” Trump said in a brief statement. “We are protecting our workers and making it clear that if you want access to the U.S. market, you have to play by our rules.”

While the administration has framed the deal as a diplomatic win, economists see it as a warning sign for emerging markets. “If anything, tariffs are going to go up from here, not down,” said Sebastian Raedler, head of European equity strategy at Bank of America.

According to experts at Citi, the Vietnam agreement sets a precedent that could place other emerging Asian economies such as Thailand and Malaysia in a vulnerable position. The 20% tariff rate, coupled with the unexpected 40% penalty on transshipped goods, is viewed as more aggressive than anticipated, signaling tougher future negotiations.

“There may be spillovers to other exporters that have relied on Vietnam as a manufacturing base,” Citi strategists noted, pointing to countries like South Korea that have invested heavily in Vietnamese factories over the past decade.

Economists expect a wave of similar deals as countries rush to avoid steep tariffs. India has been identified as a likely next contender, though sensitive sectors like agriculture could complicate negotiations. “India will find it hard to allow U.S. market access without domestic backlash,” said Trinh Nguyen, senior economist for emerging Asia at Natixis CIB.

Analysts say the U.S. appears more interested in fast-track, “rough” frameworks than comprehensive trade agreements, favoring flexibility over formality.

The European Union, however, may not benefit from the same willingness to deal. Trade negotiations with the U.S. have stalled amid disputes over digital taxation, big tech regulations, and geopolitical tensions. While Vietnam and other Asian nations have proactively sought U.S. engagement, Europe faces a more contentious relationship with the Trump administration.

“Vietnam shows it is very difficult for Europe to get what it wants which is tariff-free,” said Nguyen. Trump has floated tariffs as high as 50% on European imports, while the EU has threatened countermeasures, both of which are temporarily paused until July 9.

Sources close to the matter say a minimalist, politically symbolic agreement may be the EU’s best hope. “A bare-bones deal is all they can realistically expect right now,” an EU trade official told CNBC.