Trump Reveals Vietnam Trade Deal for Duty-Free US Goods

    0
    0

    WASHINGTON — In an announcement Wednesday, President Donald Trump unveiled a new trade agreement with Vietnam, which paves the way for U.S. goods to enter the Southeast Asian nation without any tariffs. In contrast, Vietnamese products entering the United States would face a 20% tariff. Expressing his satisfaction on his Truth Social platform, Trump hailed it as “a Great Deal of Cooperation between our two Countries.”

    Earlier this year, Trump had introduced a 46% tariff on imports from Vietnam. This action was part of a broader series of tariffs known as reciprocal tariffs, targeting nations with which the United States incurs trade deficits. To create space for negotiations, like the one with Vietnam, Trump had paused these tariffs for 90 days. This period is set to conclude on Tuesday, and to date, a similar trade agreement has only been reached with the United Kingdom. Furthermore, Trump managed to secure a “framework” agreement with China on a different trade matter.

    Mary Lovely, a senior fellow at the Peterson Institute for International Economics, remarked on Vietnam’s eagerness to resolve these trade issues, noting the pressure exerted on smaller nations by these tariffs. While Vietnam has reached this agreement, Lovely expressed skepticism about Trump’s ability to enforce such imbalanced deals with larger players like the European Union and Japan.

    The U.S. recorded a trade deficit of $122 billion with Vietnam last year, ranking it third behind deficits with China and Mexico. The new trade agreement also includes a significant 40% tax on “transshipping” — a practice where goods from another nation briefly transit through Vietnam on their way to the U.S. The U.S. alleges that this method has been used to avoid higher tariffs, particularly those previously applied to Chinese products.

    William Reinsch, a former trade official now with the Center for Strategic and International Studies, commented on the complexities of defining and enforcing transshipment regulations. He noted the range of practices from outright fraudulent relabeling to legitimate transformation into a new product in Vietnam, affecting enforcement.

    Contrary to some beliefs, a February study in the Harvard Business Review suggested that the extent of such rerouting is considerably less than previously estimated.

    In a separate development, May saw the Vietnamese authorities approve a $1.5 billion joint project between the Trump Organization and a local partner. The project aims to establish a vast golf resort near Hanoi, covering an expanse akin to 336 football fields.

    Vietnam has been strategically favored by U.S. efforts to counterbalance China’s regional dominance, with many companies relocating portions of their supply chains from China to Vietnam. In 2023, this dynamic turned Vietnam into a pivotal diplomatic player, being the only country to host U.S. President Joe Biden and Chinese leader Xi Jinping on state visits. That same year, the U.S. elevated Vietnam’s diplomatic standing to the top tier of “comprehensive strategic partner,” aligning it with nations like China and Russia.