With Less than a week Going before the July 9 deadline for new trade deals, US President Donald Trump has unveiled a new trade deal with Vietnam, a country that has quickly become one of the largest Exporters in the United States
On Wednesday, Trump announced about the “Social Truth”, his social media platform, that the United States would impose a 20% tariff on Vietnamese exports to US products that were thought to have been transferred through Vietnam would receive 40% tax.
In return, Trump claims that Vietnam will lower all tariffs to US products and “open his market to the United States”, pointing to the US SUV as a “wonderful accessory” to Vietnam roads.
The Vietnam benchmark has climbed 0.5%, at 1:00 pm east. Shares of American companies with high production presence in Vietnam Rose. Nike increased by 4%, while Apple jumped by 2.2%.
Vietnamese state media Reports That’s Lam, the Secretary -General of the Communist Party of Vietnam and the country’s leader, spoke with Trump on Wednesday to discuss tariff negotiations. According to the report, the United States “will significantly reduce reciprocal tariffs for many Vietnamese imports” and that Trump “highly valued” Vietnam’s promise will award preferential access to the market for US products, including high -engine vehicles. Lam also reportedly urged Washington to abolish export restrictions on certain high-tech products.
The deal makes Vietnam one of the few governments that reached an agreement with Washington from April 2 or or “Liberation Day”. Trump reached an agreement with the UK in early May and last week achieved a trade truce with Beijing.
However, the details of the US trade agreement are dark. “The interpretation of the transshipment is unclear,” DBS Bank wrote in the research note.
Transitoma refers to a practice where goods are moved from one boat to another before being sent to their final destination. However, the Trump administration also accuses Vietnam that it is a back door for Chinese products to avoid US tariffs.
Illegal transshipment usually involves changing the certificate of origin in a new country, without adding significant value.
Vietnam turned into A key production center For global supply chains. Apple, Nintendo and other electronics manufacturers have moved the final assembly to their products in Vietnam, and to avoid US tariffs for China and diversify their supply chains.
These components often come from Chinese suppliers, but Vietnam -based manufacturers also add value through the final assembly before the US goods are delivered
“I suspect the terms are still developing. This is likely to be more than a framework,” said Deborah Elms, head of trade policy at the Finrich Foundation.
Details of the deal can also be transferred between Trump’s announcement and when the deal is formalized through an executive order. That process can last for weeks: The United States and the UK have announced their agreement in early May, which was not official until mid -June.
“The details will be extremely important,” warns Elms. “Depending on the product and the production process, the rate may be lower or much higher, up to 40%. The uncertainty should continue for some time.”
A significant increase in US SUV purchases can also be high for Vietnamese consumers. The average Vietnamese worker’s monthly income is about $ 320, significantly less than an average US worker.
Vietnam’s biggest purchases from the United States were computers and electronic products, and machinery and instruments, according to Vietnam government data. The country probably imported these goods to support the production of electronics.
The 20% tariff is less heavy than the 46% rate first proposed in early April. However, it is still making a ramp in the trade tricks between the United States and Vietnam. Also, the basic tariff rate of 10% imposed on the entire import is double.
Vietnam is highly exposed to the United States, with 30% of his exported there, according to DBS.
DBS predicts a possible short -term rally on Vietnam stock markets before the announcement of a second quarter GDP, which the country’s deputy prime minister suggests that it will be strong 7.6% of a year. “However, the bracket for signs of economic slowdown should export a dissipation to the front load,” the bank warns.
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