At 8:00 PM (Vietnam time) on July 2, 2025, General Secretary Tô Lâm held a phone call with U.S. President Donald Trump to discuss the Vietnam–U.S. relationship and ongoing negotiations regarding reciprocal tariffs between the two countries.
Only a preliminary framework – no final details yet
On July 2, 2025, US President Donald Trump announced a new trade agreement with Vietnam, under which:
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The US will impose a 20% retaliatory tariff on Vietnamese exports,
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A 40% tariff will apply to goods considered as “transshipped,”
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In return, Vietnam will eliminate all import tariffs on goods from the US.
According to KBSV Securities, the current announcement is only a preliminary framework, lacking clarity on:
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The definition of “transshipping”, and
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The specific list of affected goods.
Two main scenarios to interpret the new tariffs:
Scenario 1: 20% is the total combined tariff (MFN + retaliatory)
In this interpretation, the 20% tariff includes:
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MFN (Most-Favored-Nation) duties, which Vietnamese exports already face when entering the US (typically 5–15%),
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Plus an additional retaliatory portion, estimated at ~5–10%.
This outcome is more favorable than the 46% tariff rate previously proposed in April 2025, and comparable to the temporary 10% rate imposed on all countries earlier.
However, the impact will vary across sectors. For goods that previously enjoyed very low MFN rates (e.g., electronics at ~1%), this new combined rate could result in a substantial tax burden.
Scenario 2: 20% is purely the retaliatory tariff
If 20% is interpreted as a standalone retaliatory tariff, the final tax burden could exceed 25–30% once MFN duties are added.
Still, Vietnam’s position remains relatively competitive:
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China is subject to 10–30%, depending on the product,
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The UK faces about 10%,
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Vietnam is now the third country to reach a deal, after the UK and China.
Hence, the relative impact depends more on how other countries are taxed, rather than just Vietnam’s absolute rate.
Additional factors to monitor
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40% transshipment tariff: The precise definition is not yet available – whether based on raw material content or production steps – making it difficult to assess the full impact.
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Currency risks: New trade policies may affect the strength of the USD and influence foreign capital flows to and from Vietnam.
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Domestic competition: Vietnam’s decision to cut US car import duties to 0% could increase competitive pressure on local automotive manufacturers.
Final take
Although the 20% rate is higher than market expectations, it is still a manageable outcome and significantly better than the earlier 46% figure. The ultimate effect will depend on how the US imposes tariffs on other countries and Vietnam’s ability to leverage its advantages – including competitive labor, strategic supply chain location, and investor incentives.
