Trade Alert: U.S.-Vietnam Trade Deal Announced—Key Impacts and What Businesses Need to Know

Schulz Trade Law
Jul 8
4 min read

Trade Alert:

U.S.-Vietnam Trade Deal Announced

Key Impacts and What Businesses Need to Know

July 8, 2025

A Major Shift in U.S.-Vietnam Trade Relations

On July 2, 2025, President Donald Trump announced via Truth Social that the United States has reached a new trade agreement with Vietnam. While concise, the announcement included three significant components:

A 20% tariff will now apply to all Vietnamese-origin goods imported into the U.S.
A 40% tariff will apply to goods transshipped through Vietnam from third-party countries.
The U.S. will gain full access to Vietnamese markets, including zero tariffs on American exports.

While further implementation details are pending, this announcement represents a dramatic policy shift from the previously enforced 46% reciprocal tariff on Vietnamese goods. Moreover, the new provisions are clearly aimed at deterring transshipment schemes, a growing concern for U.S. regulators as companies seek to circumvent tariffs via Vietnam.

What the U.S.-Vietnam Deal Signals

This deal underscores a recalibration of U.S. trade policy in Southeast Asia, where Vietnam has played a complex role. As China-based manufacturing has slowed or relocated, Vietnam has emerged as a strategic supply chain hub—a shift that the U.S. both benefits from and views with caution.

By applying a reduced 20% tariff on Vietnamese imports, the U.S. is signaling a willingness to engage with Vietnam more constructively. However, the 40% transshipment tariff signals continued vigilance against tariff evasion, especially where Chinese goods are funneled through Vietnam and re-labeled to avoid existing tariffs.

Meanwhile, the agreement’s most favorable provision—the elimination of tariffs on U.S. exports to Vietnam—marks a potentially significant win for American agriculture, machinery, and high-tech sectors. The deal could pave the way for more predictable bilateral trade and enhanced U.S. foreign direct investment in Vietnam.

Comparing Old vs. New Tariff Terms

Prior to this agreement, Vietnamese-origin goods faced a 46% reciprocal tariff, a holdover from earlier trade enforcement actions. For many companies, this rate created a cost burden that narrowed profit margins and discouraged sourcing from Vietnam.

U.S.-Vietnam Under the new structure:

Product Origin	Previous Tariff	New Tariff (July 2025)
Vietnamese-origin goods	46%	20%
Transshipped goods (via Vietnam)	Varies	40%
U.S. exports to Vietnam	Varies	0% (duty-free)

This reduction to 20% on Vietnamese goods improves predictability, but it still leaves importers with significant cost calculations. Companies need to evaluate whether savings from Vietnamese sourcing offset the still-steep tariff rates.

Transshipment Crackdown: 40% Tariff Explained

One of the most consequential aspects of the agreement is the 40% tariff on goods transshipped through Vietnam from other countries. This measure is designed to:

Curtail “tariff engineering”, where goods are lightly modified or relabeled in Vietnam to avoid tariffs meant for other origin countries (especially China),
Ensure the integrity of country-of-origin declarations, and
Protect legitimate Vietnamese manufacturers from reputational harm.

This provision may impact importers using Vietnamese supply chains as routing points. Companies must now carefully audit their supply chains to ensure that goods labeled as Vietnamese genuinely originate there.

Failure to comply could result in hefty duties, audits by U.S. Customs and Border Protection (CBP), and penalties under false origin claims.

Sector-Specific Impacts of U.S.-Vietnam Trade Deal

1. Manufacturing & Electronics

Vietnam is a global electronics assembly hub. For firms sourcing components such as semiconductors, circuit boards, or smart devices, the 20% tariff will be a cost consideration—but not necessarily a dealbreaker. The zero-tariff access for U.S. goods, however, opens the door for U.S.-made equipment and components to enter Vietnam more competitively.

2. Agriculture & Food Exports

For U.S. farmers and food producers, the tariff-free access to Vietnam is highly favorable. Key exports like soybeans, poultry, beef, and corn stand to gain significant market share in Vietnam's growing consumer economy. Trade volume may increase as prices drop and logistical hurdles are eased.

3. Automotive & Machinery

U.S. machinery exports—especially precision tools, heavy equipment, and auto components—may now expand in Vietnam. Meanwhile, American automakers sourcing parts from Vietnamese factories must recalibrate costs with the new 20% import tariff in mind.

Foreign Direct Investment (FDI) in Vietnam

Vietnam has long attracted U.S. FDI due to its political stability, lower labor costs, and growing infrastructure. This agreement further strengthens that relationship by offering increased market access and clearer tariff expectations.

For U.S. companies operating manufacturing plants or logistics hubs in Vietnam, this agreement offers the potential for:

Lower export costs for U.S. goods,
Reduced risk of supply chain penalties, and
A more stable investment climate under U.S.-Vietnam cooperation.

However, companies must remain proactive in documenting product origin and complying with enhanced transshipment monitoring protocols.

Next Steps for Businesses

The deal is still new, and implementation details may follow in the coming weeks. Businesses should take the following actions now:

Review Country of Origin Protocols Ensure documentation is accurate and that Vietnamese labeling reflects actual origin.
Audit Supply Chains Identify potential transshipment risks and restructure sourcing to avoid triggering the 40% tariff.
Update Pricing Strategies Factor the new 20% tariff into cost models for Vietnamese-origin goods.
Explore Export Opportunities to Vietnam U.S. exporters should consider how the zero-tariff access improves competitiveness in Vietnamese markets.
Monitor Implementation Dates Track official notices from USTR and CBP regarding effective dates and HS code-level changes.

At Schulz Trade Law PLLC, we are closely monitoring these developments and providing clients with strategic guidance to mitigate risks, evaluate tariff exposure, and adapt compliance strategies. Our team is ready to deliver timely, tailored support to navigate these changes.

Contact us today to ensure your business is prepared for the evolving trade landscape.

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