The United States on October 26 unveiled an “intended” trade agreement framework with Vietnam, amidst President Donald Trump's visit to Southeast Asia for the Association of Southeast Asian Nations (ASEAN) summit, Bloomberg reported.
Notably, this development comes after the Trump administration in July announced a 20 per cent base tariff on Vietnam, down from the initial 46 per cent threatened. The Southeast Asian country is an “export powerhouse”, selling everything from coffee to clothing and engine parts, it said.
This announcement also comes on the same day that the US announced trade deals with Malaysia, Thailand and Cambodia for rare earth metals amid curbs imposed by China. Notably, all three have bagged 19 per cent tariff deals from the US in exchange for raw and processed rare critical minerals.
US-Vietnam trade deal: What does the framework propose?
- As per the announced trade framework, Vietnam will give “preferential market access for substantially all industrial and agricultural imports” from the US into the country.
- Further, the US will offer zero tariffs on some selected Vietnamese products.
- It said that Vietnam has agreed to address issues including recognising US vehicle standards, easing import rules for US medical devices and pharmaceuticals and fulfilling international intellectual property commitments.
- The two countries are also expected to finalise “commitments on digital trade, services and investment”, it said.
The report added that the document released by the White House did not mention details on which products will likely be included in the tariff exemption, but a decision is expected to be “finalised in the coming weeks”.
What have Vietnam authorities said?
In a statement from the Vietnamese government, authorities said that the country's Prime Minister Pham Minh Chinh had a “brief” meeting with Donald Trump on the sidelines of the ASEAN summit.
It added that Chinh also invited the US president to visit Vietnam on behalf of the country’s top leader, To Lam.
What is the biggest challenge to Trump's Vietnam, SE Asia deals?
The Bloomberg report noted that Donald Trump's deals with Vietnam, and other Southeast Asian countries (Malaysia, Thailand, and Cambodia), still face one crucial hurdle. This challenge is what the US considers “transshipped” goods, which are at present subject to 40 per cent tariffs.
It noted that Vietnam faces a “tough” situation as this uncertainty persists, as China is its biggest trading partner and main source of imported components and raw materials.
Over the next year, Vietnam is targeting a significant 10 per cent growth amid global trade volatility weighing on investments and exports, as per the Bloomberg report.
In the last quarter, the country's economy grew 8.2 per cent — its fastest in three years. This was largely due to factories jumping exports to the US before the higher tariffs kicked in. In 2025, Vietnam is aiming for 8.3-8.5 per cent growth, it added.
(With inputs from Bloomberg)
