On July 2, 2025, President Trump announced on a social media post that the United States had entered a trade agreement with Vietnam. According to the post, the agreement will provide for the importation of US products into Vietnam free of tariffs. In exchange, Vietnamese imports will be assessed a 20% duty. Additionally, a 40% tariff will apply to transhipments—i.e., goods originating from third countries shipped to the US via Vietnamese ports.
Background
Vietnam was among the countries hardest hit by the reciprocal tariffs announced by President Trump on April 2, attracting a 46% duty. Though this rate was quickly postponed, with Vietnamese goods being subject to the 10% baseline rate in the interim, the postponement is set to expire on July 9. According to the 2025 National Trade Estimate Report (published by the US Trade Representative), Vietnam’s average most-favored-nation applied tariff rate was 9.4% in 2023, with most US imports enjoying a tariff of 15% or less.
Vietnam is a significant commercial partner for the United States, with $149.6 billion in bilateral trade between the two countries in 2024, according to the US Trade Representative, though US-bound Vietnamese goods account for more than 90% of this value. Vietnam is second to China by export volume to the United States in a number of harmonized schedule classes, including those applicable to furniture, footwear, apparel, toys, games, and sports apparel.
The higher rate for transhipped goods is thought to address the US government’s concerns related to circumvention involving China. The US administration views Vietnam’s ports as a way for Chinese suppliers seeking to circumvent US trade measures aimed at China. On present information, it is unclear whether the agreement will distinguish between transhipped products based on their ultimate origin or if a single rate will be applied to all transshipments.
Additionally, the US has long criticized Vietnam for loose intellectual property enforcement and widespread counterfeiting, though Vietnam has taken steps to strengthen intellectual property protections both before and after the imposition of the reciprocal tariffs.
Takeaways
Details of the agreement are yet to be confirmed. Businesses that import goods between the United States and Vietnam or those whose supply chains traverse Vietnam, should monitor further developments to assess how the trade deal impacts their operations.
