Politics
JUST IN: Trump Announces Huge Trade Deal With Major Economy
President Donald Trump announced on Wednesday that his economic advisors have struck a trade deal with the government of Vietnam, paving the way for American companies to sell to the country without tariffs while reaping the benefits of a new arrangement that ensures fair competition.
Over the past decade, an increasing number of U.S. companies have migrated their assembly lines to Vietnam, where cheap labor and a less adversarial political climate has provided an attractive alternative to China. But the shift has generated pressure as those same companies were pressed by tariffs on imports sold to Vietnam.
That all changes as part of Trump’s new trade deal, which he framed as a “Great Deal of Cooperation” between both countries in a social media post.
“The Terms are that Vietnam will pay the United States a 20% Tariff on any and all goods sent into our Territory, and a 40% Tariff on any Transshipping,” the president announced, the latter a reference to goods from other countries that ship through Vietnam.
“In return, Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade. In other words, they will ‘OPEN THEIR MARKET TO THE UNITED STATES,’ meaning that, we will be able to sell our product into Vietnam at ZERO Tariff.”
Trump predicted that the deal would be a boon to U.S. automakers who are constrained by limited domestic demand and eager to export popular American vehicles without absorbing the painful international tariffs that often make such shipments financially infeasible.
“It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam,” he added while thanking General Secretary To Lam for the “absolute pleasure” of working together to strike a deal.
The deal on transshipment was particularly important for the Trump administration. White House economic advisor Peter Navarro has referred to Vietnam as a “colony of China” for allowing the country’s communist government to ship its goods through Vietnam, thereby avoiding larger American tariffs.
Vietnam has now become the first country to avoid reciprocal tariffs that President Trump promised to slap with rates between 20 and 50% beginning July 9. The U.S. has previously reached agreements with the U.K., which was not subject to those tariffs, as well as a three-month pause in tariffs with China while both sides work toward a long-term deal.
Under a draft copy of the framework obtained by Politico, the U.S. and Vietnam will work to “establish favorable rules of origin,” a reference to the estimated 40% of Vietnamese imports that are believed to originate from China. It also states that Vietnam will strengthen its enforcement over areas such as intellectual property theft.
Vietnam will also “provide preferential market access” to American farmers selling poultry, pork, and other agricultural goods overseas. A memo of understanding signed by Hanoi includes promises to purchase $8 billion worth of Boeing aircraft and another $2.9 billion of American agricultural products.