US and Vietnam finalise trade agreement, easing tariff threats and expanding market access
The rate is lower than an initial 46 per cent levy Mr Trump announced in April on goods from Vietnam which was due to take effect next week.
Mr Trump said that goods from Vietnam would face a 20 per cent tariff and that any trans-shipments from third countries would face a 40 per cent levy.
Details were scarce and it was not immediately clear how the trans-shipment provision would be implemented.
Vietnam would also provide the United States with more market access, with US exports to the country facing no tariffs, Mr Trump said.
That agreement appears to include US exporters of large-engine cars, according to Mr Trump and Vietnamese state media.
'It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam,' Mr Trump said on Truth Social.
'It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam,' Mr Trump said.
Vietnamese President To Lam asked in a phone call with Mr Trump earlier on Wednesday that the United States recognise Vietnam as a market economy and remove restrictions on the exports of high-tech products to the country, Vietnam News Agency reported.
Those changes have long been sought by Vietnam and dismissed by the US.
Since Mr Trump imposed tariffs on hundreds of billions of dollars in Chinese goods in his first term, US trade with Vietnam has exploded although almost all of it in the form of goods to the United States from Vietnam as importers sought workarounds for the China levies.
Since 2018, Vietnam's exports are up nearly three-fold from less than $US50 billion ($A76 billion) that year to about $US137 billion in 2024, Census Bureau data shows.
US exports to Vietnam are up only about 30 per cent in that time - to just over $US13 billion last year from less than $US10 billion in 2018.
The White House and the Vietnamese trade ministry did not immediately respond to a request for comment.
Mr Trump announced a wave of tariffs for countries around the world on April 2, before pausing the implementation of most duties until July 9.
More than a dozen countries are actively negotiating with the Trump administration to avoid a steep spike in tariffs on their exports.
Trump's administration has teased that a deal with India is also coming soon but it has said that others may not be ready by July 9.
The United Kingdom negotiated a limited trade deal with the Trump administration, accepting a 10 per cent US tariff on many goods, including cars in exchange for special access for aircraft engines and UK beef.
Like the agreement struck with the UK in May, the one with Vietnam resembles more a framework than a finalised trade pact.
China and the United States also came to a truce in a tit-for-tat tariff battle that resulted in China restoring US access to some rare-earth minerals but the two sides left most of their disagreements to later negotiations.
The high potential tariff rate for Vietnam on shipments to its largest export market reflects its large trade surplus with the United States, which US government data shows topped $US123 billion last year.
A hefty tariff could significantly limit access for Vietnam-made goods to its main market and upend the Communist-run country's export-oriented growth model.
The government said last month that it would stick to its target for economic growth of at least eight per cent this year despite the looming risk from the tariffs.
Vietnam has already taken several measures to reduce its trade gap with the United States, including cutting tariffs on a wide range of US goods, pledging to buy more goods from the United States and stepping up its crackdown on some trade with China over possible fraud on rules of origin of exports.
Sources told Reuters last month that the United States wanted Vietnam to reduce the use of Chinese tech in devices that are assembled in the country before being exported to the United States.
Vietnam has said it wanted to maintain harmonious trade ties with both the United States and China, its largest trading partner on which it heavily relies on for materials and equipment for its manufacturing industries.
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