Trade relations between Vietnam and the US have become a source of uncertainty following President Trump's tariff announcements. Vietnamese manufacturers are grappling with the lack of clarity in the agreement's terms.
Vietnam Avoids High Tariffs, But What's Next?
Vietnam was one of only two countries to strike a last-minute agreement before the deadline set by Trump, avoiding the initial 46% tariff threat. However, the new public rate of 20% leaves businesses without answers. Company chair Tran Nhu Tung expressed concern over the tariff's applicability: "For the products that have materials from China but manufactured in Vietnam, what is the tariff to export to the US?"
Panic Over Transshipment Clause
A clause in the Trump deal threatens to apply a 40% tariff on transshipped goods. Without a clear definition of what transshipment means, manufacturers fear that goods containing Chinese components—even if legally assembled in Vietnam—will be subject to higher tariffs. Rich McClellan, founder of RMAC Advisory, indicated that this clause is potentially the most ambiguous and risky aspect of the agreement.
Vietnamese Authorities Seek Clarity Before Deadlines
Prime Minister Pham Minh Chinh met with the US-Asean Business Council to push for clearer terms. The group represents companies like Apple and Amazon. Pham noted that specific product rates are still missing. Investors haven't pulled back yet, with foreign direct investment in Vietnam rising nearly 30%. However, US retailers are already expressing concerns over potential price increases and inflation due to tariffs.
Vietnam's early actions may have helped evade the harshest threats from the US, but the lack of a clear agreement leaves many questions unanswered.
