President Donald Trump has announced a trade deal with Vietnam that imposes a 20% tariff on Vietnamese exports to the U.S. and a 40% tariff on goods transshipped through Vietnam, particularly targeting Chinese products rerouted to avoid U.S. tariffs.
What Happened: In exchange, Vietnam will grant the U.S. tariff-free access to its domestic markets. Trump hailed the agreement on Truth Social as a "Great Deal of Cooperation," highlighting the potential for U.S.-made SUVs to penetrate Vietnam's auto market.
The agreement, detailed by Bloomberg, aims to curb transshipment, where goods from China are minimally processed in Vietnam to gain "Made in Vietnam" labels, exploiting lower tariff rates.
However, economists and experts have warned that this deal could provoke retaliation from China, Vietnam's largest trading partner.
Bloomberg Economics' Rana Sajedi notes that Beijing may view this as a direct challenge, potentially leading to targeted trade measures, as seen in past retaliations against EU tariffs on Chinese electric vehicles.
Meanwhile, financial and political commentator Brian Rosenstein described the deal as “horrible,” stating that “American businesses will now be paying between 20 and 40% for imports coming from Vietnam. It's literally like they want inflation.”
Economist Peter Schiff also said in an X post that “Americans will suffer by paying higher prices for Vietnamese imports, while the Vietnamese will enjoy paying lower prices on American imports.”
China's Ministry of Commerce has expressed opposition to agreements that harm its interests, stating it will "resolutely counter" such moves, per Bloomberg.
Why It Matters: The deal reflects U.S. efforts to isolate Chinese firms from global supply chains, pressuring Vietnam to police transshipments.
However, enforcement remains unclear, as defining transshipped goods is complex, according to trade experts cited by Bloomberg.
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, edged higher in premarket on Thursday. The SPY was up 0.12% at $621.15, while the QQQ advanced 0.20% to $551.92, according to Benzinga Pro data.
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