The U.S.-Vietnam trade deal has captured global attention and sparked concern across emerging markets. On Thursday, President Donald Trump announced the deal just before new U.S. tariffs take full effect.
Vietnamese goods sent to the U.S. will face a 20% tariff—lower than the 46% rate imposed earlier in April. In return, Vietnamese tariffs on U.S. goods will remain at zero, easing pressure on American exporters.
Trump also revealed a 40% tariff on goods routed through Vietnam from other countries before shipping to the U.S. This move aims to stop transshipping, a practice where exporters—often from China—bypass trade rules.
The U.S.-Vietnam trade deal is one of the few bilateral agreements reached before Trump’s 90-day tariff reprieve ends.
According to BofA strategist Sebastian Raedler, “Tariffs are more likely to rise, not fall, after this deal.” However, this agreement may offer other countries a new path to negotiate better trade terms with the U.S.
Mark Williams of Capital Economics believes other nations could secure lower tariffs than Vietnam’s 20% rate.
Vietnam had little leverage due to its deep trade reliance on the U.S., weakening its negotiation stance. Experts at Citi expressed concern for other emerging Asian economies, such as Thailand and Malaysia.
They noted that the separate 40% tariff on transshipped goods came as a surprise to global markets. Countries that set up factories in Vietnam—like Korea—may also face unintended consequences.
Despite concerns, more trade deals could follow, with a rough framework instead of full agreements. India is seen a potential next candidate. Its agriculture sector could complicate talks. Allowing broader U.S. market access may cause political backlash within India, according to Natixis economist Trinh Nguyen.
The deal’s message for Europe, however, is less encouraging than it is for Asian countries. Lavanya Venkateshwara from OCBC Bank said Vietnam had actively sought talks before the April tariff changes. This contrasts with the EU’s slower engagement and ongoing tensions with U.S. trade policies.
Europe may not get the tariff-free deal it wants. Instead, it might settle for a 10% duty with some sectoral gains. Talks between the EU and the U.S. have been sluggish, complicated by issues like digital tax and big tech regulation.
President Trump has floated tariffs as high as 50% on European goods, with the EU threatening to retaliate. The measures are pause. But reignite if negotiations stall further.
