Key Points
- President Donald Trump announced a new trade deal with Vietnam, imposing a 20% tariff on all Vietnamese goods exported to the United States and a 40% tariff on any transshipped goods.
- In exchange, the United States will receive "total access" to Vietnam's domestic market, with American products entering Vietnam at zero tariff.
- Trump personally negotiated the agreement with To Lam, General Secretary of the Communist Party of Vietnam, and described the deal as a "Great Deal of Cooperation".
- The announcement comes just days before the expiration of a 90-day pause on Trump's reciprocal tariffs, which had subjected Vietnamese imports to a 46% tariff.
- President Trump also threatened to impose tariffs of up to 35% on Japanese goods if a trade deal is not reached before the July 9 deadline.
- Trump criticized Japan as "spoiled" and accused the country of unfair trade practices, particularly in rice and automobile imports.
- Japan's Deputy Chief Cabinet Secretary Aoki Kazuhiko acknowledged Trump's statements but declined to comment on specifics, while negotiations continue.
- The United States had a $68 billion trade deficit with Japan in 2024, importing $148 billion in goods from Japan last year.
- Vietnam is the sixth-largest source of U.S. imports, with $137 billion in goods shipped to the U.S. in 2024.
- The U.S. administration is engaged in ongoing trade negotiations with over a dozen countries as the tariff pause nears its end.
President Donald Trump has announced sweeping new trade measures targeting two of Asia’s largest economies, imposing a 20% tariff on all Vietnamese exports to the United States and threatening to levy tariffs of up to 35% on Japanese goods if a bilateral agreement is not reached by July 9. The moves, which Donald Trump described as part of his broader effort to secure “fair and reciprocal” trade for the United States, mark a significant escalation in his administration’s trade policy as the 90-day pause on reciprocal tariffs draws to a close.
What Are the Details of the New U.S.-Vietnam Trade Deal?
As reported by the Times of India, President Donald Trump announced the new trade deal with Vietnam on Wednesday via his social media platform Truth Social, declaring, “I just made a Trade Deal with Vietnam. Details to follow!” Trump emphasized that the agreement was finalized after direct talks with To Lam, the General Secretary of the Communist Party of Vietnam. In his statement, Trump wrote,
“It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam after speaking with To Lam, the Highly Respected General Secretary of the Communist Party of Vietnam”.
What Are the Key Terms of the Agreement?
According to Economic Times and Nikkei Asia, the deal stipulates that:
- Vietnam will pay a 20% tariff on all goods exported to the U.S.
- A 40% tariff will be imposed on any goods transshipped through Vietnam to the U.S.
- In return, the U.S. will have “TOTAL ACCESS” to Vietnam’s domestic market, allowing American products to be sold there without any import tariffs.
Trump stated,
“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”.
What Is the Economic Significance of the Deal?
As reported by CNN Business, Vietnam is a crucial trading partner for the United States, ranking as the sixth-largest source of U.S. imports, with $137 billion in goods shipped to the U.S. last year—more than double the figure from five years ago. The deal is being touted by Trump as a major win for U.S. exporters, particularly American automakers. Trump expressed confidence that large American vehicles, particularly SUVs, would thrive in Vietnam under the new agreement, stating,
“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”.
Has Vietnam Confirmed the Agreement?
While Trump has publicly promoted the deal, Indian Express notes that Vietnamese officials have yet to publicly confirm the agreement or its details. The announcement comes just days before a 90-day pause on many of Trump’s reciprocal tariffs is set to expire, with Vietnamese imports previously subject to a 46% tariff.
What Did Trump Say About Japan and the Tariff Threat?
As reported by Manufacturing Dive, President Trump told reporters on Tuesday that the U.S. may levy tariffs of up to 35% on Japanese goods once the administration’s 90-day pause on country-specific duties expires next week. Trump stated,
“So what I’m going to do is I’ll write a letter, say ‘We thank you very much and we know you can’t do the kind of things that we need and therefore you’ll pay 30%, 35% or whatever the number is that we determined’”.
According to The Hill, Trump expressed skepticism about reaching a deal with Japan before the July 8 deadline, labeling the country as “spoiled.” He remarked,
“I have my doubts about Japan—they are quite formidable. You must realize, they are spoiled. I have a great fondness for Japan, and I also appreciate the new prime minister. As you know, Abe was one of my closest allies”.
Trump criticized Japan for refusing to import American rice and cars, while selling millions of vehicles in the U.S., calling the trade deficit “quite unjust to the American populace”.
What Are the Main Sticking Points in U.S.-Japan Negotiations?
The major points of contention, as outlined by Manufacturing Dive and NHK WORLD-JAPAN, are:
- The Trump administration’s demand for Japan to import more rice and automobiles from the U.S..
- Japan’s reluctance to open its market to these products, despite a domestic rice shortage.
- The U.S. currently has a $68 billion trade deficit with Japan, importing $148 billion in goods last year.
- Trump’s insistence on “reciprocal” tariffs, with a baseline 10% rate currently in place, but country-specific rates set to rise after July 9.
How Has Japan Responded?
Japan’s Deputy Chief Cabinet Secretary Aoki Kazuhiko acknowledged Trump’s statements but declined to comment further, stating only that negotiations are ongoing. Japanese officials have emphasized Japan’s contributions to the U.S. economy, such as manufacturing 300,000 vehicles in the U.S. for export, and have offered cooperation on rare-earth supplies in response to China’s export controls. However, these overtures have not swayed the Trump administration, which remains focused on reducing the trade deficit and increasing U.S. exports to Japan.
What Is the Broader Context of Trump’s Trade Policy Moves?
As reported by CNN Business and The Hill, the Trump administration is engaged in trade negotiations with over a dozen countries as the 90-day pause on reciprocal tariffs nears its end. The Vietnam deal represents the third trade pact Trump has brokered in the past three months, though it remains unclear whether all details have been finalized. Trump has repeatedly framed these moves as efforts to correct what he views as decades of unfair trade practices that have disadvantaged American workers and businesses.
What Are the Potential Impacts on Global Trade?
The new tariffs and threatened measures signal a significant escalation in U.S. trade tensions with key Asian partners. The steep tariffs on Vietnamese goods could disrupt supply chains and raise costs for American consumers and businesses reliant on imports from Vietnam. The threatened tariffs on Japan risk further straining relations with a major ally and trading partner, potentially impacting sectors ranging from agriculture to automobiles.
What Comes Next for U.S. Trade Relations with Vietnam and Japan?
While President Trump has announced the deal as a major achievement, the lack of public confirmation from Vietnamese officials leaves some uncertainty about its implementation. The expiration of the 90-day tariff pause on July 9 adds urgency to finalizing and enforcing the agreement.
Is a U.S.-Japan Trade Deal Likely Before the Deadline?
Given Trump’s public skepticism and the unresolved issues around rice and automobile imports, a comprehensive trade agreement with Japan appears unlikely before the July 9 deadline. If no deal is reached, Japanese goods could face tariffs as high as 35%, further complicating trade between the two nations.
What Is the Reaction in Vietnam and Japan?
As of this writing, Vietnamese officials have not issued a formal response to Trump’s announcement. In Japan, government officials have acknowledged the U.S. statements but have refrained from public comment on the specifics, while business leaders and policymakers weigh the potential impact on key export sectors.
What Are the Implications for U.S. Consumers and Businesses?
The imposition of higher tariffs on Vietnamese and potentially Japanese goods is likely to increase costs for American consumers and businesses, particularly in industries that rely on imported components or finished products from these countries. Conversely, U.S. exporters may benefit from improved access to the Vietnamese market if the agreement is fully implemented.