On Wednesday, July 2nd, President Trump announced that the United States has reached a trade agreement with Vietnam after a conversation with the Chairman of the Vietnamese Communist Party. Under this agreement, American goods will enter the Vietnamese market tariff-free.
President Trump took to the social media platform “Truth Social” to share the news: “Just reached a trade agreement with the Socialist Republic of Vietnam after discussions with General Secretary of the Communist Party of Vietnam. This marks an important collaboration between our two countries.”
According to the terms of the agreement, Vietnam will impose a 20% tariff on goods shipped to the United States and a 40% tariff on goods transshipped through Vietnam to the U.S.
Vietnam has agreed to eliminate all tariffs on imported American goods. In return, Vietnam will take unprecedented measures to allow complete access for American products into their trade market, as President Trump stated.
In his statement, Trump emphasized that Vietnam will “open up its market to the United States”, which means American products will be able to be sold in Vietnam with zero tariffs. He highlighted the potential for SUVs, also known as “Large Engine Vehicles,” which have performed well in the U.S., to diversify Vietnam’s product lines.
The President noted that he had negotiated with the Vietnamese General Secretary and finally reached this agreement.
According to data from the U.S. Census Bureau, Vietnam was the sixth-largest import supplier to the U.S. in 2024, exporting nearly $137 billion worth of goods.
Following Trump’s remarks, furniture and clothing manufacturers’ stocks rose, with shares of companies like Amson Amfud, Nike, and Lululemon surging 7.2%, 3.9%, and 2.9%, respectively.
While the 20% tariff level might be higher than what investors expected, the trade agreement has also dispelled some uncertainties.
Vietnam serves as a crucial production hub for companies like Nike, GAP, and Lululemon, where items ranging from T-shirts to jeans and sneakers are manufactured.
In early April, Trump initially introduced global “reciprocal tariffs” imposing a 46% tariff on Vietnamese goods, impacting the stocks of the aforementioned companies. However, this was later reduced to a baseline tariff of 10% to allow for negotiation.
After weeks of negotiations, the U.S. and Vietnam have reached an agreement. During the talks, the U.S. pressured Vietnam to enhance efforts against trade fraud, ensure more stringent enforcement measures against transshipment of Chinese products, and urged Vietnam to eliminate non-tariff barriers to American goods.
Vietnam voluntarily proposed to drop all tariffs and made several commitments to purchase more American products. Vietnamese officials flew to the U.S. to seek support and sign agreements, including deals worth $3 billion for agricultural products. The Vietnamese Minister of Trade also engaged with executives from Nike, GAP, and other companies to encourage their support in the negotiations.
The agreement with Vietnam marks the third one announced by the United States, following agreements with the UK and China. U.S. trade partners are all rushing to reach agreements with the U.S. before the final deadline on July 9th.