Trump reveals new trade pact with Vietnam, imposing a 20% duty on their exports
In a move aimed at rebalancing trade deficits, former President Donald Trump introduced reciprocal tariffs on Southeast Asian countries, including Vietnam, in 20XX. These tariffs, which were temporarily suspended for 90 days, could be re-imposed unless the countries meet specific U.S. demands[1].
### Impact on US Companies and Trade Agreements
The U.S. is pushing for a reduction of trade surpluses by urging these countries to import more from the U.S. or export less to it. This could affect American companies relying on export markets in Southeast Asia, as tariffs could increase costs and disrupt supply chains[1].
The U.S. also demands the elimination of various non-tariff barriers such as value-added taxes, biosecurity standards, and digital trade restrictions. For U.S. companies, especially tech firms, this could open up markets currently constrained by such policies but also creates negotiation challenges[1].
Another significant aspect is the restrictions on inputs from China. Companies that shifted manufacturing bases from China to Southeast Asia may face difficulties due to the tariffs aiming to reduce reliance on Chinese components even when those components are used in goods exported from Southeast Asia to the U.S[1].
Specific trade deals, such as the one between the U.S. and Vietnam, formalize tariff rates and signal the Trump administration's willingness to enforce tariffs to secure trade terms favorable to U.S. interests[2].
### Overall Implications
If tariffs are re-imposed on goods from Southeast Asia, U.S. companies might face higher costs and supply chain uncertainties. Southeast Asian countries may be pressured to renegotiate existing trade agreements or create new terms to comply with U.S. demands[1].
The reciprocal tariff policy appears to be more of a one-sided demand, with the U.S. offering little in return, complicating negotiations and potentially straining diplomatic and trade relations[1].
In 2024, half of the footwear and almost 30% of the clothing produced in Vietnam were exported to the U.S. Trump stated that Vietnam will do something unprecedented as part of the agreement. He also announced tariffs of 46% for Vietnam on April 2, 20XX[3].
Brands such as Apple, Intel, and Coca-Cola are affected by the 20% tariff on Vietnamese exports[4]. The White House has stated that the July 9 deadline for achieving new agreements is not rigid[5].
The new trade agreement with Vietnam is one of dozens that the U.S. is negotiating during the pause on reciprocal tariffs[6]. White House spokesperson Karoline Leavitt stated that the U.S. trade representative, Jamieson Greer, is having productive discussions with several of Washington's main trading partners[6].
[1] Source: The Diplomat [2] Source: CNBC [3] Source: Reuters [4] Source: Bloomberg [5] Source: The Wall Street Journal [6] Source: The New York Times
- The average American company relying on export markets in Southeast Asia might experience increased costs and disrupted supply chains due to potential re-imposition of tariffs, as these tariffs could also impact business-related financial matters.
- The general-news landscape is filled with discussions about politics and trade, as the re-imposition of tariffs on goods from Southeast Asia could lead to the renegotiation of existing trade agreements, which could affect multiple nations' economies and international diplomatic relations.
