President Trump announces trade deal with Vietnam that will let US goods into the country duty-free

Key Points

• President Trump announced a trade deal that grants U.S. goods duty-free entry into Vietnam, while Vietnamese exports to the U.S. will still face a 20% levy.
• The agreement follows Trump’s threat of a 46% reciprocal tariff on Vietnamese products, which was suspended for 90 days to allow negotiations; only the UK deal and a China “framework” have since been finalized.
• The U.S. ran a $122 billion trade deficit with Vietnam last year—the third-largest after China and Mexico—and this pact aims to narrow that gap.
• To curb tariff avoidance, the U.S. will impose a 40% tax on transshipped goods routed through Vietnam, targeting Chinese products evading higher U.S. duties.

WASHINGTON (AP) — President Donald Trump announced a trade deal with Vietnam Wednesday that would allow U.S. goods to enter the country duty-free.

Vietnamese exports to the United States, by contrast, would face a 20% levy.

On his Truth Social platform, Trump declared the pact "a Great Deal of Cooperation between our two Countries.''

In April, Trump announced a 46% tax on Vietnamese imports — one of his so-called reciprocal tariffs targeting dozens of countries with which the United States runs trade deficits. Trump promptly suspended the reciprocal tariffs for 90 days to allow for negotiations like the one with Vietnam. The pause expires Tuesday, but so far the Trump administration has reached a trade agreement with only one of those countries — the United Kingdom. (Trump has also reached a "framework'' agreement with China in a separate trade dispute.)

“Vietnam has been very keen to get out from under this,'' said Mary Lovely, senior fellow at the Peterson Institute for International Economics. ”This is forcing a smaller country to eat it, basically. We can do that. It's the big countries that everybody's keeping their eyes on.'' She doubts that Trump will be able to impose such a lopsided agreement on big trading partners such as the European Union and Japan.

The United States last year ran a $122 billion trade deficit with Vietnam. That was the third-biggest U.S. trade gap — the difference between the goods and services it buys from other countries and those it sells them — behind the ones with China and Mexico.

In addition to the 20% tariffs, Trump said the U.S. would impose a 40% tax on "transshipping'' — goods from another country that stop in Vietnam on their way to the United States. Washington complains that Chinese goods have been dodging higher U.S. tariffs by transiting through Vietnam.

William Reinsch, a former U.S. trade official now with the Center for Strategic and International Studies, said the significance of the transshipment crackdown will depend on "how the term is defined and enforced. Some transshipment is outright fraud – simply changing the label; some is a legitimate substantial transformation in Vietnam into a new product; and there is a lot in between. Enforcement is always complicated.''

A February study in the Harvard Business Review found that there was "much less rerouting than previously believed.''

In May, Vietnam approved a $1.5 billion project by the Trump Organization and a local partner to build a massive golf resort complex near Hanoi, covering an area roughly the size of 336 football fields.

Vietnam was a beneficiary of American efforts to counter China’s influence. Companies looking to diversify their supply chains away from China flocked to Vietnam.

In 2023, it became the only country to host both President Joe Biden and Chinese leader Xi Jinping on state visits. That year, the U.S. upgraded Vietnam to its highest diplomatic status—comprehensive strategic partner—placing it on par with China and Russia.

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Aniruddha Ghosal reported from Hanoi, Vietnam.