Trump Sets 20% Tariff on Vietnam, 40% on Transshipped Goods; China Threatens Response

President Donald Trump announced a two-tier trade agreement with Vietnam late on 2 July that sharply revises US tariff policy toward the Southeast Asian nation. All goods produced in Vietnam will be subject to a 20 percent US import duty—less than the 46 percent levy threatened for failure to reach a deal. Merchandise judged to be merely routed through Vietnam, rather than substantially made there, will incur a 40 percent tariff. In exchange, Hanoi has committed to give American exporters duty-free access and to tighten rules against illegal transshipment.

Vietnam’s exports to the United States are worth about 12 percent of its gross domestic product, according to ING. Economists warn the 20 percent tariff could shave as much as 2.5 percentage points off output if demand weakens. Companies also face uncertainty over how US customs will define sufficient local content—a threshold that will determine whether the higher 40 percent rate applies to products assembled with Chinese parts. The accord nonetheless leaves Vietnam better off than many Asian peers facing higher “reciprocal” duties under Washington’s new tariff regime.

Beijing condemned the pact, saying it “resolutely opposes deals that hurt third parties” and will “safeguard its legitimate rights and interests if required.” China’s Commerce Ministry added that it is assessing counter-measures, reviving concerns that Beijing could restrict exports of strategically important inputs such as rare-earth minerals. The agreement therefore adds a fresh layer of complexity to regional supply-chain shifts already accelerated by Washington’s 145 percent tariff on Chinese goods introduced in April.