In early July 2025, Vietnam and the United States reached a provisional understanding to reduce impending U.S. tariffs on Vietnamese exports. Under the framework announced on July 2, the United States would lower its proposed 46 percent blanket tariff to 20 percent for most goods from Vietnam, while maintaining a higher 40 percent rate on products deemed “trans-shipped” through Vietnam from third countries. In exchange, Vietnam would eliminate its own import tariffs on U.S. goods—granting American exporters full tariff-free access to the Vietnamese market.
While promising, the agreement remains unfinalized and unpublished, introducing continued uncertainty for companies reliant on U.S.–Vietnam trade. It is a timely reminder that even public agreements may shift in scope or implementation, and that businesses should remain adaptable in the face of evolving geopolitical developments.
The Broader Context: U.S. Tariff Expansion
Concurrently, the U.S. administration has issued formal tariff notifications to dozens of other trading partners, warning that without a negotiated deal, new import duties will take effect on August 1. Rates range from 25 percent for Japan and South Korea, to 36 percent for Thailand, 35 percent for Bangladesh, and 30 percent for South Africa. For countries without an individualized agreement, the U.S. may simply impose a flat 15 to 20 percent tariff.
According to President Trump’s statements, these tariffs are intended as negotiating leverage: “There will be no tariff if they decide to build or manufacture products in our country.” Regardless of policy intent, the near-term impact on global supply chains and sourcing strategies is significant.
Vietnam’s Position: A Relative Advantage
If formalized, Vietnam’s negotiated 20 percent tariff rate offers a comparative advantage over many of its regional peers. For U.S. importers, Vietnam remains an attractive hub, particularly in high-volume sectors such as electronics, furniture, and apparel. By avoiding both the blanket rates and additional “BRICS” penalties, Vietnam may offer a more stable sourcing environment—at least in the short term.
However, that edge could narrow. Countries like India, Bangladesh, and Thailand are actively negotiating and may secure more favorable terms. Importantly, according to President Trump, Vietnam has agreed to fully eliminate tariffs on U.S. goods, whereas others may preserve certain protective measures.
Further complicating the outlook is a pending U.S. legal challenge to the administration’s reciprocal tariff authority (see our article on this issue here). Past trade court rulings have already invalidated similar broad-based tariffs, raising questions about the enforceability of the current round.
Key Considerations for Businesses
In this dynamic environment, businesses should be proactive and strategic.
- Monitor U.S. Customs and Border Protection (CBP) guidance for clarity on tariff application, rules of origin, and substantial transformation requirements.
- Reevaluate pricing models and contractual terms, including tariff allocation and force majeure clauses, to mitigate cost volatility.
- Review tariff classifications to ensure goods are accurately categorized and assessed under the correct rates.
- For U.S. exporters, zero-tariff access to Vietnam presents an opportunity, but success in that market requires a deliberate strategy, including local partnerships, regulatory navigation, and long-term market planning.
