Context

  • U.S. President Donald Trump and the General Secretary of the Communist Party of Vietnam To Lam held a phone call on July 2 about bilateral trade, with a particular emphasis on import tariffs. Following the call, both sides released public statements through their own channels that reflected different perspectives.
  • Trump posted on his Truth Social social media platform that he had just made a “great deal” with Vietnam, under which Vietnam would pay a “20 percent tariff on any and all goods” sent to the United States and a “40 percent tariff on any transshipping. He added that Vietnam would give the United States “total access to their markets,” which means the United States will be “able to sell our product to Vietnam at zero tariff.”
  • Separately, local media reported an official statement from Vietnam’s Ministry of Foreign Affairs. According to this statement, both leaders welcomed a joint statement on a bilateral framework agreement, on which their negotiators had agreed. The Vietnamese described it as a reciprocal, equal and balanced agreement. Trump expressed appreciation about Vietnam’s commitment to grant preferential market access to U.S. products and affirmed that the United States would significantly reduce reciprocal tariffs on various imports from Vietnam. Both sides indicated their intention to continue addressing outstanding trade-related issues.

Significance

  • The draft of the bilateral agreement, obtained by U.S.-based Politico, says the two countries will continue working on the deal until a final agreement is reached “within the coming weeks.” The agreement will result in a “substantial reduction” of U.S. tariffs on imports from Vietnam. The draft statement did not report any details about what levels the final tariffs would be, in contrast to precise figures Trump posted after the call. The draft deal outlined a range of Vietnamese goods on which tariffs would apply, including tech products, footwear, agricultural and consumer goods such as toys, but it did not list tariff levels. The draft agreement also says Vietnam will grant “preferential market access” for farm products such as poultry, pork and beef and that Vietnam would soon confirm that it will buy 50 Boeing aircraft and nearly $3 billion in agricultural products.
  • The call between the two leaders marked an important milestone in the trade talks but did not conclude a final agreement between the two countries. Negotiations will continue with the aim of finalizing a detailed bilateral agreement covering specific tariffs by product categories in addition to commitments related to transshipment, rules of origin and nontariff barriers.

Implications

  • Businesses should watch out for a joint statement outlining the next steps toward a bilateral trade agreement to be released soon. The statement will likely not include specific tariffs but generally promise significant reductions in U.S. tariffs on Vietnamese imports. It will also include U.S. demands about transshipment and nontariff barriers and Vietnam’s commitment to provide preferential market access for U.S. products.
  • None of the statements released July 2 specify which tariffs will apply after the pause in reciprocal tariffs ends July 8. The current tariffs are expected to remain in effect until a bilateral trade agreement is finalized between the two countries

We will continue to keep you updated on developments in Vietnam. If you have any comments or questions, please contact BGA Vietnam Managing Director Nguyen Viet Ha at vietha@bowergroupasia.com

Best regards,

BGA Vietnam Team

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Managing Director

Ha is a highly respected Vietnamese lawyer, with special expertise in financial transactions, mergers and acquisitions, as well as general business, trade and investment-related issues. Before joining BGA as managing director for Vietnam, Ha managed the Vietnam operations of BrooksBowerAsia for three years. She built and led the Vietnam team and serviced clients in various sectors ranging from energy and ICT to healthcare, logistics and consumer production. Ha practiced law in Vietnam in the 1990s, providing legal advice and consulting services to Fortune 500 clients. She also participated in drafting a number of laws and regulations, including the Foreign Investment ... Read More