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With just days left before a self-imposed July 9 ultimatum, President Donald Trump pushed through a trade agreement with Vietnam, narrowly averting what would have been the most punishing tariff hike yet under his administration’s economic policy. The last-minute deal marks a critical moment in Trump’s broader effort to close trade loopholes and exert pressure on global partners he believes have taken advantage of the United States.
Trump had previously signaled intentions to enforce new tariffs on any country that failed to meet his terms. Vietnam, one of the fastest-growing exporters to the U.S., was squarely in his crosshairs, accused of benefiting from goods rerouted to bypass China tariffs—a practice known as transshipping.
Under the terms of the agreement, all goods manufactured and directly exported from Vietnam to the United States will now face a 20% tariff. This marks a dramatic increase in cost for a range of products—particularly apparel, footwear, sports gear, and consumer electronics—that dominate Vietnam's export portfolio to the U.S. market.
For Vietnam, while this is a bitter pill, it’s a lesser evil compared to what was looming. The administration had previously floated a much more severe tariff hike of 46% back in April, a threat that sent shockwaves through global markets.
The deal’s harshest measure targets goods that merely pass through Vietnam as a stopover before entering the U.S.—without being manufactured there. These transshipped items, often used by Chinese manufacturers to dodge higher tariffs, will now face a punishing 40% tariff under the new enforcement rules.
This policy sends a clear message: any country acting as a backdoor for Chinese products to reach American consumers will be penalized. It also adds significant pressure on logistics companies and customs brokers, who must now prove the origin of goods with much more scrutiny.
In the immediate aftermath of the deal’s announcement, shares in clothing companies and sports equipment manufacturers—many of whom rely on Vietnamese factories—rose sharply on hopes that the agreement would provide stability. But once the fine print was released, and it became clear the tariffs would still be steep, the rally evaporated.
Stocks in these sectors quickly declined as investors recalibrated for increased operational costs and reduced margins.
This whiplash reaction underscores the volatile impact of Trump’s unpredictable trade maneuvering on global supply chains and investor confidence.
While the focus has largely been on the tariffs imposed on Vietnamese exports, the deal also includes significant concessions for American exporters. Goods manufactured in the U.S. will now enjoy tariff-free access to Vietnamese markets. This is expected to benefit American agriculture, heavy machinery, medical equipment, and other key industries—particularly as Vietnam remains eager to diversify its import sources.
This provision helps Trump reinforce his "America First" narrative, using bilateral leverage not just to punish but also to open markets for U.S. goods.
Though the 20% and 40% tariffs are no small matter, they are far from the economic sledgehammer Trump initially threatened. Vietnam avoids the full 46% tariff, at least for now. However, the reprieve may be temporary.
Trump has left open the door to even harsher measures if Vietnam is found to be non-compliant with transshipment monitoring or if the trade balance shifts unfavorably in the coming months.
This keeps Hanoi on edge and places long-term pressure on its export strategies and industrial policies.
This deal fits squarely into the broader strategy Trump has pursued throughout his presidency—using tariffs not just as economic tools but as diplomatic leverage. The administration is increasingly focused on closing trade loopholes, targeting friendly nations that benefit from indirect trade with China, and realigning supply chains to favor U.S. interests.
In doing so, Trump has set a precedent for aggressive enforcement, signaling that even allies will not be spared if they are perceived to undermine U.S. economic sovereignty.
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