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US-Vietnam Trade Tensions: Trump's Tariff Hike Amid Uncertainty

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US-Vietnam Trade Tensions: Is a Trade Deal at Risk?

Foreign media reports indicate that Vietnam had believed it had reached a preliminary agreement with the United States to significantly reduce tariff levels, but at the last minute, then-US President Donald Trump decided to raise tariffs.

Although Trump stated on social media that Vietnamese leader To Lam had accepted the terms of the agreement, sources familiar with the negotiations suggest that the Vietnamese government has not formally accepted this vital item to date. The failure of either side to publish any official documents raises doubts as to whether an actual agreement was reached, while the White House is trying to show that negotiations with several key trade partners are progressing.

Trump announced this framework agreement on July 2 on the Truth Social platform, just days before the self-imposed negotiation deadline of July 9. At the time, this was the second agreement the Trump administration had reached to avoid implementing a threat of "reciprocal" tariffs, although he claimed to have "reached 200 agreements" in April.

According to Trump's post, Vietnamese exports would face tariffs of 20%, lower than the 46% rate announced in April that was later suspended, or a 40% rate on goods originating in a third country. In exchange, Trump said Vietnam would "open its markets to the United States," allowing American products to enter Vietnam duty-free.

The news sparked strong reactions in Vietnam, as Vietnamese negotiators did not accept the 20% rate. They reportedly agreed to a level of around 11%. Trump directly ignored this figure during a call with To Lam, who was not directly involved in the negotiations, and unilaterally announced a nearly doubling of tariffs.

A Washington lobbyist, who cooperates with Vietnam and other Asian countries, pointed out that even some American insiders were surprised, describing the reaction from the Vietnamese side as "surprise, disappointment, and anger." A White House aide asserted that Vietnam was aware of the tariff level prior to the call, saying that the trade teams of the two countries had basically finalized the details, and the leaders' call was just a "final stamp of approval."

However, neither party has so far published a final agreement containing these tariffs, nor have they formally approved the agreement. It is unclear when, or if, the new tariffs will take effect.

Wendy Cutler, former Acting Deputy U.S. Trade Representative, pointed out that this approach would only exacerbate uncertainty, making one wonder if Trump could still overturn the agreement at any time, even after believing it had been negotiated, and emphasized that this public adjustment seemed to have been made unilaterally by the US.

Trump expressed dissatisfaction with the slow pace of trade negotiations, saying he preferred to send a direct letter stating tariff levels rather than "laboriously negotiating comprehensive agreements with all the countries of the world." He said at the White House: "A letter means an agreement; we cannot meet with 200 countries one by one."

Trump this week issued new tariff decisions for other Asian countries, including imposing a 20% tariff on the Philippines, scheduled to take effect on August 1, but not including concessions Vietnam had hoped to obtain regarding rules of origin.

Since Trump announced his tariff plans, Hanoi has issued few public comments. Vietnamese state media reported on July 2 that Trump's call with To Lam resulted in a "joint declaration of a fair, balanced, and mutually beneficial trade agreement," but did not mention any specific rates. The declaration has not been published to date, which may reflect Hanoi's disappointment over Trump's undermining of the original agreement.

This raises concerns among regional experts, who believe it could undermine decades of renewed diplomatic relations and growing economic and trade ties between the two countries since the end of the Vietnam War. Data shows that since the signing of a bilateral trade agreement in 2001, trade between the US and Vietnam has grown from $2.9 billion in 2002 to over $139 billion in 2022. Vietnam has become the sixth-largest source of imports for the United States.

Meanwhile, other countries are also taking note of this tariff storm, and the anxiety of US trade partners is increasing, believing they are dealing with a president who may arbitrarily change the outcome of negotiations.

Harry Broadman, former Assistant U.S. Trade Representative responsible for trade affairs under George H.W. Bush and Bill Clinton, commented that Trump's approach undermines the credibility of negotiators, and when other countries see that agreements can be overturned at any time, they will question "Why are we wasting our time negotiating with you? How do we determine that the terms agreed upon here are truly the final agreement?"


Broader Implications for Global Trade

Trump's actions, as reported, not only raise questions about the future of US-Vietnam trade relations but also broader concerns about the stability of global trade. The constant threat of tariffs and the ability to unilaterally change negotiated agreements can erode confidence in the US as a reliable trading partner. This could encourage other countries to seek alternative trade agreements with more predictable partners.

Additionally, Trump's approach could lead to greater uncertainty in global markets. Companies may reduce investment and delay expansion if they fear tariffs could suddenly change, impacting supply chains and disrupting established trade operations.


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