- Trump aims for 90 trade deals within 90 days but has only secured 3 frameworks.
- Vietnam is set to impose a 20% tariff on U.S.-bound goods and a 40% tariff on transshipping.
- The new trade arrangement calls for significantly reduced U.S. tariffs on imports from Vietnam.
Trump’s Vietnam Trade Deal and Its Implications
In the world of trade deals, President Donald Trump has been pushing for something of a record-setting pace, aiming for 90 agreements in just 90 days. However, with barely a week to go until his July 9 deadline, he has managed to secure frameworks for just three potential deals – with the United Kingdom, China, and, most notably, Vietnam. This leads us to the recently announced trade arrangement with Vietnam, which has garnered attention, especially regarding tariffs and market access for the United States.
The Role of Tariffs and Trade Relations
As part of the agreement, President Trump stated on his social media platform that Vietnam will impose a 20% tariff on all goods exported to the United States and a hefty 40% tariff on any transshipping. Vietnam’s General Secretary, Tô Lâm, confirmed the arrangements but hinted that trade relations are still evolving. He noted that Trump has promised to significantly lower reciprocal tariffs on various Vietnamese imports while working to address other lingering trade concerns in key areas.
Concerns Over Transshipping and Market Access
However, there is a lingering issue with how tariffs function. Trump, often criticized for misunderstanding trade dynamics, seems to overlook that tariffs are indeed paid by American importers and not by the exporters in other countries. While tariffs might theoretically penalize countries like Vietnam in terms of trade balance, ultimately the burden falls on American consumers facing increased prices on imported Vietnamese goods, including popular items such as footwear. More troubling is the concept of ‘transshipping’ – a term that refers to the practice of Chinese companies rerouting goods through Vietnam to bypass U.S. tariffs, which has been a substantial challenge during both Trump’s and Biden’s administrations.
In summary, while the announced trade deal between the United States and Vietnam introduces new tariffs and aims for greater trade access, the complexities of tariffs and the ongoing issue of transshipping remain significant points of concern. Furthermore, the effectiveness of the agreement in terms of its economic impact and addressing underlying trade deficits and currency manipulation is yet to be seen. Overall, this trade framework raises questions about how the U.S. will navigate its relationships with both Vietnam and China in the coming months.
