US and Vietnam Set Basic Trade Deal Terms
Former US leader, Donald Trump, said on Truth Social that US and Vietnam came to an idea of a trade deal. He talked with Vietnam's leader, To Lam, about taking away all tariffs on US goods sold in Vietnam. It also seeks to lower tariffs on goods from Vietnam to the US and to focus on stopping ways that let some avoid high taxes.
US and Vietnam flags show the new trade deal
Main Parts of the Deal
The early suggestion was a 46% tariff on Vietnam, but now, the basic plan says:
- US Goods to Vietnam: They can come into the country tax-free.
- Vietnamese Goods to the US: Their tax drops from a high 46% to 20%.
- Tax for Moved Goods: A 40% tax will be set on goods that are moved from another place to avoid US taxes.
Note that this deal is just a starting idea. Both sides need to talk more and agree on details, which might take weeks or months.
Why This Deal Matters
The deal follows better US-Vietnam ties since 1995. For Vietnam, it means teaming up more, as they do not agree with China over sea areas.
Still, China trades a lot with Vietnam, more than $205 billion of goods in 2024. Most of what Vietnam gets from China is raw stuff and tools for making things to sell.
Stopping Tax Dodges
The 40% tax on moved goods is key. This stops tricks like sending almost-made items to Vietnam, just adding a bit, then selling them to the US as if they were made in Vietnam, to skip taxes on Chinese items.
The final deal must be clear on phrases like "big changes", which decide if a product truly comes from a place.
Vietnam as a Future Tech Maker
Vietnam wants to be a big tech maker, and this deal helps. It makes Vietnam more appealing for big, long jobs.
The tax on moved goods might push Chinese firms to truly set up and spend more in Vietnam, lifting Vietnam's money scene. Yet, it might also make things tense with China.