The trade deal with Vietnam that the Trump administration has announced in the last days of a 90-day pause in U.S. tariff hikes would impose “a 40% tariff rate [on goods] if they originated in another country and were transferred to Vietnam for final shipment to the United States” (CNBC, July 2, 2025).
The provision refers to goods from any other country coming into Vietnam before going on to the United States. But there’s one tariff-evading country in particular that Trump and his negotiators had in mind.
The process, known as transshipping, is used to circumvent trade barriers. China, a top exporter to the U.S., has reportedly used Vietnam as a transshipment hub.
Trump wrote that “Vietnam will pay” that 20% duty, but tariffs are taxes on foreign goods that are paid by the importers of those products.
The agreement was unveiled less than a week before a 90-day pause on many of Trump’s so-called reciprocal tariffs was set to expire, sending U.S. duties on imports from dozens of countries soaring.
Under that protectionist trade plan, Vietnamese imports to the U.S. were subject to a 46% blanket tariff. That rate was lowered to 10% during the 90-day interim.
In President Trump’s words, he has “made a Trade Deal with the Socialist Republic of Vietnam after speaking with To Lam, the Highly Respected General Secretary of the Communist Party of Vietnam. It will be a Great Deal of Cooperation between our two Countries. The Terms are that Vietnam will pay the United States a 20% Tariff on any and all goods sent into our Territory, and a 40% Tariff on any Transshipping. In return, Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade. In other words, they will ‘OPEN THEIR MARKET TO THE UNITED STATES,’ meaning that, we will be able to sell our product into Vietnam at ZERO Tariff.” OKAY.
Time magazine says that the most important element of Trump’s trade agreement with Vietnam “and his talks with other major trading partners—has been an effort to counter what he sees as China’s unfair trade practices. Trump’s trade adviser Peter Navarro called Vietnam ‘essentially a colony of communist China’ in an April interview on Fox News…. ‘Vietnam sells us $15 for every $1 that we sell them, and about $5 of that is just Chinese product that comes into Vietnam: they slap a Made in Vietnam label on it and they send it here to evade the tariffs.’ ”
What about any nontariff barriers to trade that Vietnam imposes on U.S. imports?
If the International Trade Administration, a part of the Commerce Department, is reporting accurately: “Vietnam eliminated many non-tariff barriers under the 2001 United States-Vietnam Bilateral Trade Agreement and through its accession to the WTO, including quantitative restrictions on imports, quotas, bans, permit requirements, prior authorization requirements, licensing requirements, and other restrictions having the same effect, which appeared to be inconsistent with its WTO commitments. Nonetheless, many other non-tariff barriers remain in place.”
That is ITA’s summary of the situation as of January 30, 2024.
