Talk about coming down to the wire: With exactly one week left to go until the 90-day tariff pause is lifted, we’ve got the first new US trade deal since the mid-June agreement with the UK.
The US has locked in a trade agreement with Vietnam, President Trump announced via Truth Social. It’s a big deal, both literally and figuratively: Vietnam is America’s sixth-biggest supplier of imported goods, responsible for shipping $136.6 billion worth of textiles, footwear, and electronics to the US in 2024. It’s also a key geopolitical partner for the US in its efforts to thwart China’s growing influence in Southeast Asia.
Vietnam deal details
According to the White House, any goods the US imports from Vietnam will face a 20% tariff—lower than the 46% tariff the president slapped the country with in early April, but still higher than the blanket 10% tariff currently in effect.
More importantly, Trump noted that “any transhipping” of Vietnamese goods will be tariffed at 40%. Transhipping refers to goods manufactured in another country—say, electronic components made in China—shipped to Vietnam, and then assembled in the country and sold to the US. The practice has been a handy way for Chinese companies to circumvent US trade restrictions, and has been a sticking point in US negotiations with Vietnam.
In exchange, Vietnam agreed to drop all tariffs on US goods. “In other words, they will “OPEN THEIR MARKET TO THE UNITED STATES,” meaning that, we will be able to sell our product into Vietnam at ZERO Tariffs,” the president posted on Truth Social.
Stock market reaction
While it’s hardly the “90 deals in 90 days” that investors were promised after tariffs were paused, any deal is a good deal at this point. Markets popped on the news, with the rally led by apparel makers, many of whom manufacture their clothing and shoes in Vietnam. Nike rose 4.06%, Columbia Sportswear gained 1.45%, VF Corp. climbed 1.96%, and ON Holdings jumped 2.85%.
Making sense of market moves
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Trump also touted the deal’s potential to boost profits for US exporters, specifically highlighting automakers. That said, the US only exported $13.1 billion in goods to Vietnam last year, according to the Census Bureau—a small fraction of the trillions of dollars worth of goods the US exports around the globe every year.
Who’s next?
Today’s announcement is great news, though as of market close there has been no official documentation forthcoming from the White House that legally seals the deal. It may be more of a handshake agreement than anything else, similar to the deals that have been made with China and the UK up to this point—which means a lot could change by the time the ink dries.
As for which countries will come to the table next, it’s anyone’s guess. Negotiations with Canada have resumed, discussions with Japan appear to be deteriorating, and the EU is seemingly fine with 10% levies as long as there are exemptions.
With just seven days left until the tariff pause is lifted, it looks like US negotiators may be working through the holiday weekend to meet their looming deadline.—MR