Vietnam girds for 20% Trump tariff as investors back deal

A man walks past a Nike billboard outside a shopping mall in Hanoi on July 8, 2025. Washington and Hanoi unveiled a trade pact with much fanfare and few details, but it allowed Vietnam to avoid Trump's initial 46 percent tariff. (AFP Photo)

Vietnam aims to sign more free trade agreements, improve supply chains, and diversify its export markets as it grapples with global uncertainty posed by the US tariff offensive.

“The global economy is being impacted by geopolitical competition, climate change, digital transformation, and especially tariff policies from major markets such as the United States,” deputy trade minister Phan Thi Thang said at an investment summit in Hanoi Wednesday. “However, Vietnam still has many opportunities to break through.”

Vietnam, an export powerhouse that last year had the world’s third-biggest trade surplus with the US, is trying to navigate Washington’s demands while keeping good relations with Beijing, its biggest trading partner. The US has said a tentative deal has been reached, setting a 20% levy on Vietnamese goods and 40% on transshipments, which is mainly aimed at China.

The nation’s trade ministry is working with businesses to respond to tariffs, including improving product quality, Thang said. “This is an opportunity to increase added-value and to shift to high-tech products.”

Vietnam’s negotiators are still working to finalize the details of the trade deal announced by US President Donald Trump last week. The 20% tariff was a significant reduction from the previously threatened 46% rate and puts it ahead of regional rivals such as Thailand, Malaysia and Indonesia, who were sent letters Monday setting out tariffs from 25% upwards.

While Vietnam currently holds first-mover advantage in Asia, it’s possible that neighbors will end up with lower levies. And it’s unclear how the terms of the 40% transshipment tariff will be enacted and enforced.

Still, investors in the nation’s stock market see the 20% tariff as “good news,” according to Thu Nguyen, deputy CEO of VinaCapital Fund Management, who expects to see more technology companies listing in Vietnam. Vietnam’s stocks have rallied to a three-year high as trade tensions shifted to other Asian nations facing higher tariffs.

Vietnam saw growth accelerate in the second quarter as foreign buyers raced to get ahead of higher Trump levies, but the uncertainty in global markets has put the central bank on standby to take steps to curb inflation and support growth.

The nation is keeping its target of at least 8% GDP growth this year, and will continue to strive for economic expansion of 10% or above in 2026-2030, Deputy Prime Minister Ho Duc Phoc said at the same investment summit Wednesday.

One of the biggest sticking points throughout negotiations was Vietnam’s trade relationship with China. The US demanded more action from Hanoi to prevent Chinese goods being rerouted and repackaged through Vietnam to skirt higher tariffs. Beijing said it was examining the trade deal and would retaliate if its interests were hurt.

“Vietnam is going to keep moving ahead, keep strengthening its ties with the US private sector,” said Ted Osius, president of the US-Asean Business Council, speaking in Hanoi. “Vietnam has very strong trade relations with Europe, with China, with the rest of Asia, and it’s going to keep pursuing trade in multiple directions.”