U.S. President Donald Trump announced a new trade deal with Vietnam that will allow American goods to enter the country without any tariffs. This agreement, revealed on Wednesday, is a significant step in U.S.-Vietnam relations, especially given the backdrop of ongoing trade tensions between the U.S. and other nations.
Under the new deal, while U.S. products will enjoy duty-free access, Vietnamese exports to the U.S. will be subject to a hefty 20% tax. Trump shared his enthusiasm for the pact on his Truth Social platform, calling it “a Great Deal of Cooperation between our two Countries.”
This agreement is particularly beneficial for companies like Nike, which relies heavily on Vietnamese factories for its products. In fact, these factories produced half of all Nike footwear in the fiscal year 2024. Following the announcement, Nike’s stock saw a significant boost, rising by 4.1%, which contributed to a rise in U.S. markets to new all-time highs.
Earlier in April, Trump had proposed a 46% tax on Vietnamese imports as part of a broader strategy targeting countries with which the U.S. has trade deficits. However, he paused these tariffs for 90 days to allow for negotiations, which ultimately led to this new deal with Vietnam.
Despite the positive outlook, analysts express concern about the implications of such a lopsided agreement. Mary Lovely, a senior fellow at the Peterson Institute for International Economics, noted that this deal puts pressure on Vietnam, a smaller country, and questioned whether Trump could impose similar terms on larger trading partners like the European Union or Japan.
In 2022, the U.S. experienced a $122 billion trade deficit with Vietnam, making it the third-largest trade gap after China and Mexico. Additionally, Trump announced a 40% tax on goods that are transshipped through Vietnam, aimed at curbing the practice of Chinese products bypassing U.S. tariffs by passing through Vietnam.
The trade deal comes at a time when Vietnam is gaining importance in the global supply chain, especially as companies look to move away from China. In fact, 2023 marked a year of significant diplomatic engagement for Vietnam, hosting both President Joe Biden and Chinese leader Xi Jinping.
As this trade agreement unfolds, it will be interesting to see how it impacts the broader economic landscape and whether it sets a precedent for future deals with other nations.