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Current Tariff: 20%

US-Vietnam Trade Analysis

Country
Vietnam
US Import Rank
#6
Import Value
$137 billion
Trade Agreement
Framework Agreement on Reciprocal Trade

Last Updated:

Quick Facts

MetricValue
US Import Rank#6
2024 Import Value~$137 billion
% of US Imports4.2%
2024 Tariff Rate~3% average
Current Tariff Rate20% (+ 40% on transshipments)
Trade AgreementFramework Agreement on Reciprocal Trade
US Trade Balance-$123.5 billion deficit

Trade Agreement

Previous Status

  • No bilateral FTA existed
  • Traded under WTO MFN rules
  • Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member (US withdrew in 2017)

Framework Agreement on Reciprocal Trade (October 2025)

Signed: October 2025

Key Terms:

AreaCommitment
US tariff rate20% on most goods
Transshipment penalty40% on Chinese goods via Vietnam
ElectronicsTemporarily exempt
Vietnam tariffs on USZero on virtually all goods

Vietnam’s Concessions

CommitmentDetail
US tariffsRemove tariffs on virtually all US goods
Vehicle standardsAccept US safety standards
Boeing aircraftPurchase 50 aircraft ($8B+)
US agriculture$2.9B in purchases

2024 Baseline Tariff Structure

Product Category2024 RateNotes
General goods~3%MFN rates
Textiles/apparelHigher ratesVaries by product
ElectronicsLowMFN treatment
FurnitureLowMFN treatment

2025 Tariff Changes

Timeline

Apr 2, 2025     "Liberation Day" - 46% reciprocal tariff announced
                (2nd highest rate, behind only Cambodia)
Apr 9, 2025     90-day pause, reduced to 10%
Jul 2, 2025     Trade deal announced - 20% rate
Aug 7, 2025     Implementation: 20% + 40% transshipment tariff

The 46% Tariff Threat

Vietnam was initially targeted with 46% reciprocal tariffs—the second-highest rate announced on Liberation Day. This reflected:

  • Large trade deficit with US ($123.5B)
  • Concerns about Chinese transshipments
  • Lack of bilateral trade agreement

Current Tariff Structure (January 2026)

Product CategoryCurrent RateNotes
General goods20%Framework rate
Transshipments40%Chinese goods via Vietnam
Steel50%Section 232
Aluminum50%Section 232
ElectronicsExemptTemporary
Smartphones/computersExemptTemporary

Exemptions

Electronics Exemption (Temporary)

ProductStatus
SmartphonesExempt (~1/3 of exports)
ComputersExempt
SemiconductorsExempt
Consumer electronicsExempt

Note: These exemptions are temporary and apply to goods actually manufactured in Vietnam (not transshipped).

Agricultural Products

  • Products not grown in the US are exempt
  • Tropical products receive favorable treatment

Economic Effects

Surprising Resilience

Despite facing the second-highest initial tariff threat, Vietnam achieved:

Metric2025 Performance
GDP growth8.02%
Economic resilienceStrong

Sector-Specific Impacts

SectorImpact
Footwear exports to USDown 27% (Sept 2025)
TextilesSignificant decline
Coffee exports to ColombiaUp 578% (market diversion)
ElectronicsRelatively stable (exempt)

Trade Diversion

Vietnam has redirected exports to other markets:

  • Increased shipments to EU
  • Greater focus on ASEAN partners
  • Coffee redirected to non-US markets

Key Products Affected

Textiles and Apparel ($44 billion, 40% to US)

StatusDetail
2024Major export category
Current tariff20%
ImpactSignificant cost increase
CompetitionBangladesh, India gaining share

Footwear (Nike: 50% global production)

CompanyVietnam Dependence
Nike50% of global production
AdidasSignificant share
Other brandsMajor sourcing hub

Impact: 27% decline in exports to US

Electronics (Samsung: $54B exports)

ProductStatus
Samsung smartphonesExempt
ComputersExempt
ComponentsMixed (some exempt)

Note: Electronics exemption critical—protects ~1/3 of Vietnam’s US exports.

Furniture ($28.3 billion to US)

StatusDetail
Pre-tariffMajor growth sector
Current tariff20%
CompetitionShifting to other suppliers

Transshipment Crackdown

The 40% Penalty

The US imposed a specific 40% tariff on goods transshipped through Vietnam to avoid China tariffs.

IssueDetail
ProblemChinese goods labeled “Made in Vietnam”
US response40% penalty tariff
Vietnam responseIncreased enforcement
Affected productsSteel, aluminum, textiles

Vietnam’s Enforcement

Vietnam has taken steps to address transshipment:

  • Enhanced customs inspections
  • Certificate of origin requirements
  • Cooperation with US authorities

Significant Events

DateEventImpact
Apr 2, 202546% tariff announced2nd highest rate
Apr 9, 202590-day pauseRelief at 10%
Jul 2, 2025Trade deal20% agreed
Aug 7, 2025Implementation20% + 40% transshipment
Aug 2025China coffee deal183 exporters authorized

China’s Strategic Response

The same week US tariffs took effect, China authorized 183 Vietnamese coffee exporters—a strategic move to capture market share from US-Vietnam trade disruption.

Vietnam’s Strategic Position

Beneficiary of China Decoupling

Before 2025 tariffs, Vietnam was a major beneficiary of US-China trade tensions:

  • Manufacturing shifted from China
  • “China Plus One” strategy
  • Electronics assembly growth
  • Furniture production expansion

Current Challenges

The 2025 tariffs complicate Vietnam’s position:

  • 20% rate higher than pre-2025
  • Transshipment crackdown
  • Competition from other low-cost countries
  • Need to prove “Made in Vietnam” authenticity

Current Status (January 2026)

What’s in Effect

  • 20% tariff on most goods
  • 40% transshipment penalty
  • Electronics exemptions (temporary)
  • 50% on steel/aluminum

Vietnam’s Commitments

  • Zero tariffs on US goods
  • US vehicle standards acceptance
  • 50 Boeing aircraft purchase
  • $2.9B agricultural purchases

Outstanding Issues

  • Electronics exemptions may expire
  • Transshipment enforcement ongoing
  • Competition from other Asian suppliers

Outlook

Vietnam secured a significantly better deal than the initially threatened 46%, but the 20% rate still represents a major increase from pre-2025 levels. The electronics exemption is critical for maintaining trade flows. Vietnam’s economic resilience (8% GDP growth) suggests adaptation, but sectors like footwear and textiles face ongoing challenges.

Sources