Vietnam Insider

HO CHI MINH CITY — The global spotlight turned to Vietnam this week as U.S. President Donald Trump announced a trade deal with Hanoi, just days before Washington’s reciprocal tariffs are set to return in full force. The agreement offers insight into how America’s evolving tariff policy could reshape global trade relationships.

Under the new deal, the United States will apply a 20% duty on Vietnamese imports — a significant reduction from the 46% rate imposed by Trump in early April. Meanwhile, U.S. exports to Vietnam will not face tariffs. The agreement also includes a 40% duty on goods originally produced in other countries but routed through Vietnam for final shipment to the U.S., a practice known as transshipping, which Washington has accused China of using to bypass trade barriers.

Vietnam is among the few nations that has managed to secure a trade deal with the White House as the clock runs down on Trump’s 90-day reprieve on new tariffs. The outcome has left other countries analyzing what this could mean for their future trade relations with the world’s largest economy.

According to Sebastian Raedler, head of European equity strategy at BofA, the deal signals that tariffs are unlikely to ease anytime soon. “What we learned from the Vietnam deal is, if anything, the tariffs are going to go up from here, not down,” Raedler told CNBC. However, others see a potential opening for further talks. Mark Williams, chief Asia economist at Capital Economics, noted that other countries might now negotiate more favorable terms than Vietnam did, given what he described as Vietnam’s limited leverage due to its heavy reliance on trade with the U.S.

The agreement has sparked concern among other emerging market economies in Asia. Analysts at Citi warned that the terms of the Vietnam deal — particularly the higher-than-expected 20% duty and the 40% rate on transshipped goods — could set a precedent that leaves other countries with little room to negotiate softer terms. Citi experts pointed out that while the deal removes some uncertainty and could pave the way for additional agreements in the days ahead, the rates agreed upon were steeper than many had anticipated.

BofA’s Raedler added that tariffs are likely to rise further after July 9, a risk the market has yet to fully price in. Economists suggest that countries like Thailand and Malaysia, along with exporters who have invested heavily in manufacturing facilities in Vietnam, could be particularly exposed. There are also concerns about spillover effects on nations such as South Korea, which have deepened their manufacturing ties with Vietnam in recent years.

Despite the challenges, experts believe more trade deals are likely in the coming days, although these agreements may resemble rough frameworks rather than comprehensive treaties. Trinh Nguyen, senior economist for emerging Asia at Natixis CIB, identified India as a possible next candidate for an agreement, though she highlighted that agriculture could be a sticking point given the domestic sensitivities around opening up India’s market to U.S. agricultural products.

While the Vietnam deal could mark the start of a wave of new agreements across Asia, it does not necessarily signal progress for Europe. Lavanya Venkateswaran, senior ASEAN economist at OCBC Bank, noted that Vietnam and other regional economies had been proactive in engaging the U.S. even before Washington’s tariff announcements in April. In contrast, she said, negotiations between the U.S. and the European Union have been more contentious, with the U.S. repeatedly criticizing the EU on various fronts in recent months.

Nguyen at Natixis CIB added that Vietnam’s experience underscores how difficult it may be for Europe to achieve tariff-free access to the U.S. market. She expects that some level of duties will be imposed and predicts the EU might accept a 10% tariff while trying to secure gains in specific sectors. Trade talks between the U.S. and EU have been slow and complicated, with little progress on key issues such as tech regulation and taxation. Trump has called for tariffs of up to 50% on EU imports, while the bloc has prepared countermeasures that remain on hold — for now.

As the July 9 deadline looms, the global trade community is watching closely to see how this new era of tariffs will take shape — and what it will mean for economies that depend on open access to U.S. markets.