Vietnam-US tariff agreement: A strategic turning point toward deeper integration

By Nguyen Tuan Viet

Fri, July 11, 2025 | 9:00 am GMT+7

The tariff agreement between Vietnam and the U.S. marks not only a trade or diplomatic breakthrough but also reflects a long-term strategic vision, bold foreign policy, and Vietnam’s commitment to deep global integration, writes Nguyen Tuan Viet, an export promotion expert and CEO of Vietgo.

Navigating tough negotiations with strategic diplomacy

To fully grasp the importance of the new Vietnam–U.S. tariff agreement, it's essential to understand the concepts of "market access" and "zero tariffs."

Market access goes beyond simply reducing import duties to 0%; it also involves creating favorable conditions for foreign - especially American - companies to enter and operate within the Vietnamese market.

This is a strategic step forward, reflecting both the vision of Party General Secretary To Lam and the determination of the Vietnamese government.

Vietnam has been negotiating with a uniquely challenging partner: President Donald Trump, known for his hardline, win-or-lose approach to international trade. In this context, Vietnam adopted a flexible but firm stance - embracing the philosophy of “giving one step to take two forward,” a reflection of the country’s diplomatic finesse.

Once President Trump achieves a perceived “win” in negotiations, he often becomes more amenable to considering his partner’s interests. This creates a crucial window for Vietnam to capitalize on future opportunities.

Being among the first countries to secure a tariff agreement with the U.S. gives Vietnam a significant edge over regional competitors. Proactively opening its market not only pressures rival economies but also strengthens Vietnam’s image as a trustworthy, integration-ready partner - and positions it as a rising hub for production and trade in the region.

Vietnam emerges as a strategic gateway for U.S. goods in Asia

One of the most immediate and powerful effects of the agreement is the expected surge in American investment in Vietnam.

With its open market, strategic location, and capacity to absorb new industries, Vietnam is quickly becoming the top choice for U.S. companies looking to shift their supply chains away from China.

This trend gained momentum after President Trump announced steep tariff hikes on Chinese imports and those from several other countries, prompting concern among U.S. businesses.

In a May 2025 survey conducted by VietGo with over 50 American firms, the vast majority confirmed their commitment to Vietnam. Rather than abandoning the country, they expressed a strong desire to relocate operations from China to Vietnam - drawn by advantages such as political stability, a skilled and cost-effective workforce, and, importantly, Vietnam’s extensive network of free trade agreements (FTAs).

Vietnam currently holds one of the largest FTA portfolios in the world, with 17 signed agreements. This means that goods manufactured in Vietnam can enter global markets with reduced or zero tariffs - an enormous incentive for companies looking to use Vietnam as a global production base.

Beyond attracting investment, Vietnam is also positioning itself as a strategic transit hub for American goods entering Asia, especially the ASEAN market. With rising demand for American consumer goods and technology in developing Southeast Asian countries, Vietnam offers a convenient gateway for redistribution - often with preferential tariffs thanks to existing FTAs.

This dynamic creates substantial opportunities for Vietnamese firms - not just as importers and distributors of U.S. products, but also as crucial links in the global supply chain. This will stimulate growth in logistics, re-export trade, and supporting industries across the country.

Room for further negotiation: Is a 20% tariff really that high?

President Trump has announced a 20% tariff on goods directly imported from Vietnam and a 40% rate on transshipping. This has sparked debate over whether the 20% rate is excessively high.

However, this should be viewed in context. As one expert noted, “We won’t know if 20% is high until we see what other countries are able to negotiate.” President Trump is famously unpredictable and often shifts his stance when new benefits come into play. It is entirely possible that the U.S. could reduce tariffs on Vietnamese goods in the near future, once its political or trade objectives are met.

On the other hand, the decision to impose tariffs on transit goods is understandable within the broader context of the ongoing U.S.-China trade war. The 40% tariff on goods originating from China is part of Washington’s strategy to isolate China from global supply chains. This approach only further reinforces Vietnam’s role as a viable manufacturing alternative and a preferred partner for U.S. businesses.

In essence, the tariff agreement between Vietnam and the United States not only establishes a new trade corridor but also reaffirms Vietnam’s strategic importance in this era of deep global integration.

With agility, flexibility, and proactive leadership, Vietnam is turning challenges into opportunities - shifting from a reactive position to a leading role - and leveraging global geopolitical realignments as a springboard to evolve into a production, trade, and logistics hub for the Asia-Pacific region.