WHAT THE NEW U.S–VIETNAM TARIFF DEAL MEANS FOR TRADE AND INVESTMENT

On July 2nd, the United States and Vietnam signed a new trade agreement that could shape global supply chains for years to come. The deal introduces a cap on tariffs — limiting import duties on Vietnamese goods at 20% — and removes tariffs entirely on American products heading to Vietnam. But the agreement comes with conditions. Goods that are merely routed through Vietnam from other countries, especially China, will face a higher 40% tariff.

This marks a shift from earlier threats by President Trump to impose sweeping tariffs of 46% or more on all Vietnamese imports. In many ways, Vietnam has avoided a major trade crisis — but businesses will still need to make adjustments to benefit from the deal.

WHY THIS MATTERS

Vietnam has become one of the United States' most important trading partners in recent years. In 2024, the U.S. imported over $136 billion worth of goods from Vietnam — mostly clothing, electronics, furniture, and machinery — while exporting only around $13 billion. That means the U.S. trade deficit with Vietnam reached more than $123 billion, one of the largest in the world.

This imbalance has drawn political pressure in Washington, especially as American manufacturing tries to rebuild. But the new deal offers a compromise: instead of punishing all Vietnamese goods with high tariffs, it aims to target only those products that pass through Vietnam without much being added.

WINNERS FROM THE DEAL

Vietnamese factories that produce goods with mostly local or regional materials will still be able to export to the U.S. at a competitive rate. These include producers of garments, wooden furniture, and some electronics that use Vietnamese parts and labour.

On the American side, the deal opens the door for more U.S. exports to Vietnam — including agricultural products like soybeans and corn, as well as liquefied natural gas. Vietnam’s growing middle class and energy demands make it a promising market for U.S. exporters.

The deal is also good news for logistics and supply chain consultants. New rules around product origin will require more paperwork and third-party audits, creating fresh demand for compliance services.

WHO MAY LOSE OUT

For Vietnamese exporters that rely heavily on Chinese inputs — such as circuit boards, batteries, or components — the deal introduces new uncertainty. If too much of a product comes from China, it could face the higher 40% tariff, even if it’s assembled in Vietnam.

Many manufacturers will now have to prove that their goods are genuinely Vietnamese in origin. This could slow down shipping times and increase costs, especially for firms that haven’t had to track materials so carefully before.

WHAT THIS MEANS FOR INVESTMENT

Despite some new hurdles, the agreement gives businesses a reason to stay invested in Vietnam — or even to deepen their presence. Investors may look to move more parts of the supply chain into the country in order to meet origin rules and avoid tariffs.

Vietnam’s government is already responding. The Ministry of Planning and Investment has said it will fast-track approval for “high-tech localisation” projects — meaning investments that help reduce reliance on imported parts, especially from China.

Companies may also consider splitting production between different countries to lower their risk. For example, they could produce key parts in Vietnam and finish assembly in Malaysia or Thailand, using those countries’ trade deals to keep tariffs low.

WHAT BUSINESSES SHOULD DO NOW

• Review supply chains: Companies importing from Vietnam need to understand how much of their product is actually made there.

• Audit suppliers: Businesses should ask suppliers for clear documentation of where parts come from, and consider switching to more local materials.

• Look at new investment zones: Regions like Da Nang are building new export zones with fewer bottlenecks and customs delays — ideal for firms needing to meet the new rules.

THE BIGGER PICTURE

This deal shows that Vietnam is no longer just a low-cost factory hub — it’s a central player in the global trade system. It also signals how the U.S. may approach trade with other frontier economies: rewarding those that cooperate and penalising those seen as helping China sidestep restrictions.

For businesses, the opportunity is clear: lean into transparency, localisation, and regional partnerships — or risk falling on the wrong side of the tariff wall.