President Donald Trump announced a new trade deal with Vietnam that will impose a 20% tariff on the country’s imports to the US. The deal, he said, will allow the US to have tariff-free access to Vietnam’s market.
Trump claims Vietnam also agreed to a 40% tariff on goods if they are imported from another country and sent to the US from Vietnam. This process is done to try and avoid high tariffs imposed upon the initial country, and it is alleged that China often uses Vietnam to do this.
This agreement comes just a week before Trump’s 90-day pause on so-called “reciprocal tariffs” was set to expire. It is unclear from the announcement when this new policy will be implemented or if both parties have signed the agreement yet.
Trump wrote that Vietnam will pay that 20%, but it is the importers that will pay that increase. Because of this, the cost could be passed on to consumers and suppliers. Some of Vietnam’s biggest exports, such as clothes and footwear, have already seen increased prices because of this.
The reasoning behind this tariff increase is supposedly because of trade imbalances. Trump claims it is a way to protect American industries.
The 90-day pause deadline, which lowered tariffs to 10% for all countries, may be ignored by Trump, as he has shown some indications. This pause began in April to give countries time to negotiate deals. Deals with China and the UK have not made much progress despite Trump claiming it is close to finalization.
