Vietnam has struck a trade deal with the United States (US) that spares it from the harshest of President Donald Trump’s proposed “reciprocal” tariffs, but analysts warn the agreement could ignite new tensions with China.
As the country with the third-largest trade surplus with the US—after China and Mexico—Vietnam was originally set to face a 46% tariff under Trump’s sweeping “Liberation Day” tariff blitz announced on April 2.
However, under the new deal announced Wednesday, Vietnam will avoid the most severe tariff and instead face a reduced minimum rate of 20%, in exchange for opening its markets to key US exports such as automobiles.
A significant feature of the deal is a 40% tariff on goods passing through Vietnam that are suspected of being used to evade higher US tariffs via transshipment—a practice Washington claims Hanoi has used to relabel Chinese goods to bypass restrictions.
Analysts note that this move appears indirectly aimed at China, as Vietnam’s manufacturing sector relies heavily on raw materials imported from its northern neighbor.
“From a global perspective, perhaps the most interesting point is that this deal again seems in large part to be about China,” said UK-based Capital Economics. The firm added that the transshipment conditions could provoke Beijing, especially if replicated in upcoming US trade agreements with other nations.
LND/SAE
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