President Donald Trump announced on Wednesday, July 2, 2025, that the United States has struck a trade agreement with Vietnam. This deal marks the administration’s third significant trade pact ahead of a crucial self-imposed July 9 deadline, which threatened to unleash even higher "reciprocal" tariffs on dozens of trading partners. While the announcement offers a glimpse of a new trade landscape, the broader state of global commerce remains remarkably fluid.
"I just made a Trade Deal with Vietnam," President Trump declared on his Truth Social platform, signaling a breakthrough in weeks of intense negotiations. In a subsequent post detailing the terms, Trump stated that the United States would impose a 20% tariff on Vietnamese exports into America and a 40% tariff for "transshipping." US Commerce Secretary Howard Lutnick later clarified on X (formerly Twitter) that the "transshipping" tariff specifically targets goods where "another country sells their content through products exported by Vietnam to us." This move is largely seen as a direct effort to curb the practice of goods, particularly from China, being rerouted through Vietnam to circumvent existing higher US tariffs.
The announced 20% tariff represents a doubling of the current minimum tariff rate the US applies to goods from Vietnam and most other nations. However, it is also a significant reduction from the staggering 46% levy that Trump had initially threatened to impose on Vietnamese imports in April, a rate among the highest he had announced globally.
In return for these tariffs, President Trump claimed a monumental concession from Hanoi. "In return, Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade," he asserted. "In other words, they will 'OPEN THEIR MARKET TO THE UNITED STATES,' meaning that, we will be able to sell our product into Vietnam at ZERO Tariff."
Immediate clarity on the finality and specifics of the deal remained elusive. Vietnam's state-run news outlet, Việt Nam News, reported that General Secretary Tô Lâm and President Trump held a phone call on Wednesday to "patch up the terms of the deal," referring to it as a "framework." The Vietnamese US embassy did not immediately respond to requests for comment from major news outlets.
During their call, General Secretary Lâm reportedly "proposed that the US soon recognize Việt Nam as a market economy and lift export restrictions on certain high-tech products," indicating that Vietnam still has its own set of long-sought objectives within the broader trade relationship.
The agreement's timing is critical. For months, the Trump administration has repeatedly stated that countries were eager to finalize trade deals with the US. However, with the July 9 deadline looming – marking the end of a 90-day pause on "reciprocal" tariffs that could have seen levies rise as high as 50% – most nations had remained silent. Restoring such historic tariffs posed a significant risk to global financial markets and businesses' supply chain strategies.
This new trade agreement comes against a backdrop of Vietnam's rapidly expanding role in global supply chains. As Trump’s administration imposed higher tariffs on Chinese goods during his first term (tariffs largely maintained by former President Joe Biden), many companies sought to diversify their production, increasingly shifting operations to Vietnam where tariff rates were comparatively lower.
This strategic shift has seen imports from Vietnam to the US skyrocket. Last year, Vietnam became the sixth-largest source of goods imported by the US, shipping an astounding $137 billion worth of products – more than double the value from five years prior. This exponential growth has, in turn, led to a corresponding increase in the US trade deficit with Vietnam. Last year, the deficit reached $123 billion, making it the third-largest trade deficit the US held with any country, up from $56 billion in 2019 (the fifth-largest). President Trump has consistently taken issue with countries running large and persistent trade deficits, viewing them as indicators of unfair trade practices, which explains his strong stance and previously proposed high "reciprocal" tariffs on Vietnam.
Among the top imports from Vietnam are critical categories like computers and electronics, apparel and accessories, and furniture. While China remains the dominant source for these goods, Vietnam has been rapidly catching up, becoming a vital alternative for companies seeking to de-risk their supply chains.
The market immediately reacted positively to Trump's announcement. Shares of major companies reliant on Vietnamese production, including Nike (NKE), Lululemon (LULU), Columbia Sportswear (COLM), and VF Corporation (VFC), all saw immediate jumps. By mid-afternoon on Wednesday, the S&P 500 had gained 0.38%, hitting a new intraday record, and the tech-heavy Nasdaq Composite rose by 0.82%. The blue-chip Dow, though slightly down, pared earlier losses following the trade deal announcement.
