The Impact of Tariffs on Vietnamese Exports: US-Vietnam Trade Relations Under Trump 2.0

The US has announced a reciprocal tariff rate of 20 percent on all Vietnamese products from August 7 - considerably lower than the 46 percent rate imposed in April, but still higher than what Vietnamese negotiators had hoped for. However, with no details confirmed by Vietnam, negotiations appear to have been inconclusive. The reciprocal tariff, along with additional duties on global steel, aluminum, automotive imports, and transshipments, poses notable challenges for export-oriented Vietnamese industries. In this article, we provide an overview of Trump’s tariff measures targeting Vietnam and examine their potential implications for the Vietnamese market.

On July 31, President Trump signed an executive order further modifying reciprocal tariff rates on 70 countries and regions. For Vietnam, a 20 percent tariff was levied, up from the 10 percent rate imposed during the 90-day reprieve but significantly below the 46 percent rate initially imposed at the beginning of April.

The 20 percent tariff aligns with the rate announced by Trump earlier in July as part of the US-Vietnam trade deal. According to Trump, the deal agreed would see Vietnam give zero-duty access to US goods entering Vietnam, while a 40 percent duty would apply to goods entering the US that were transshipped through Vietnam. However, neither side has released any official statement or details since Trump’s announcement, suggesting that the deal has not yet been finalized.

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The 20 percent tariff rate came into effect on August 7.

While the current rate is preferable to the initial 46 percent levy imposed in early April, 20 percent is still higher than Vietnamese negotiators had hoped for, and, with the addition of other sector-specific tariffs, still has the potential to significantly impact some Vietnamese industries and reshape regional supply chains. Vietnam is a major supplier of goods to the US, and many export-oriented companies will have to adjust production strategies, diversify markets, or deepen domestic value addition to remain competitive under the new tariff regime.

Background: Trump’s tariffs

Trump imposes worldwide 25 percent steel and aluminum tariffs

On February 10, Trump signed proclamations reinstating the 25 percent tariff on all steel imports (the “steel proclamation”) and increasing the tariff on aluminum imports from 10 to 25 percent (the “aluminum proclamation”). These tariffs will apply to imports from all countries and regions “without exception” and will take effect on March 12, 2025.

Trump first imposed tariffs on steel and aluminum imports in 2018 following the Section 232 Investigation, which concluded that steel and aluminum products were entering the US “in such quantities and under such circumstances as to threaten to impair the national security” of the country.

According to the steel proclamation, the 25 percent tariff introduced in 2018 successfully reduced US dependence on imports and increased the consumption of domestic steel. However, it argues that exemptions and alternative agreements negotiated under the Trump and Biden administrations have caused imported steel to account for a share of US consumption similar to pre-2018 levels.

The aluminum proclamation similarly claims that “efforts by foreign producers to circumvent the [aluminum] tariff have undermined [its] purpose.” It further states that, combined with country-specific exemptions, these efforts have driven domestic aluminum smelter capacity utilization rates below the target level intended by the tariff. The proclamation concludes that the 10 percent aluminum tariff is insufficient to address the “threatened impairment to our national security posed by aluminum imports.”

While several countries received exemptions from the 2018 steel and aluminum tariffs, Vietnam was never granted one. As a result, Vietnamese steel and aluminum exports were already subject to a 25 percent and 10 percent tariff, respectively. From March 12, the aluminum tariff will increase to 25 percent, while the steel tariff will remain unchanged.

Trump imposes 25 percent tariff on automobile imports

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On March 26, Trump signed a proclamation imposing a 25 percent tariff on imported automobiles and certain auto parts, citing a "critical threat to US national security." The tariffs officially took effect on April 3.

Revitalizing the once-thriving US automobile industry has been a key pillar of Trump’s economic agenda, closely tied to his promise to bring back manufacturing jobs. The proclamation highlights that in 1985, US factories produced 97 percent of the vehicles sold domestically. By contrast, in 2024, 50 percent of the 16 million vehicles purchased by Americans were imported, with only 25 percent of their content manufactured in the US.

Trump imposes reciprocal tariffs on all trade partners, raising tariffs on Vietnam to 46 percent

On April 2, 2025, President Donald Trump announced sweeping tariffs on global trade partners, citing a “national emergency” caused by unfair foreign trade practices. The new measures include a universal 10 percent “minimum base tariff” on all imported goods - fulfilling one of his key campaign promises - along with higher reciprocal tariffs targeting the US’s largest trading partners.

The reciprocal tariffs were initially set to come into effect on April 9, but did not apply to certain goods, namely:

• Articles subject to 50 USC 1702(b), such as personal transfers of goods without value, donations, information or informational materials, and personal items transported during personal travel;
• Steel and aluminum articles and autos/auto parts already subject to Section 232 tariffs (meaning the rate on these products will remain at 25 percent);
• Copper, pharmaceuticals, semiconductors, and lumber articles;
• All articles that may become subject to future Section 232 tariffs;
• Bullion; and
• Energy and certain other minerals that are not available in the US.

The 46 percent tariff rate on Vietnam was among the highest placed on any country, and in Southeast Asia alone, it was lower only to that imposed on Laos and Cambodia, which were subject to rates of 48 and 49 percent, respectively.

The tariff plan was first announced on February 13, 2025, when Trump signed a memorandum directing key ministers to implement a plan to impose reciprocal tariffs on all trade partners.

The “Fair and Reciprocal Plan” called for examining non-reciprocal trade relationships with all trade partners, including tariffs on US products, unfair, discriminatory, or extraterritorial taxes on US businesses, workers, and consumers (including VAT), nontariff barriers or measures, including subsidies and regulatory requirements, and policies and practices that cause exchange rates to deviate from their market value.

90-day pause and trade negotiations

On April 9, Trump signed an executive order suspending all country-specific reciprocal tariffs for a period of 90 days, applying instead the 10 percent minimum baseline tariff. The hope was that the 90-day period would give countries time to reach trade deals favorable to the US.

Vietnam was quick to step up to the task, with several rounds of trade negotiations held between US and Vietnamese officials. Vietnam also appeared to try to sweeten the deal by fast-tracking approval of the US$1.5 billion golf course in Hung Yen province for the Trump Organization.

Vietnamese officials reportedly hoped to reach a deal with the US that would see a permanent reduction of tariffs to an average of around 10 to 15 percent. However, on July 2, a few days before the July 8 deadline, Trump announced on his social media platform Truth Social that the US had reached an agreement which would see Vietnam remove all tariffs on US goods in exchange for a 20 percent tariff on Vietnamese goods imported into the US.

In addition, Trump stated Vietnam would impose a 40 percent duty on transshipments, a move that has been widely seen as targeting China, which in recent years has re-exported a substantial volume of goods through Vietnam in order to circumvent US tariffs.

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This announcement reportedly caught Vietnamese officials off guard, and in the month and a half since, no official announcement or statement has been released regarding this deal, suggesting that Vietnam had not agreed to this deal. While the Vietnamese government did not deny any details in Trump’s announcement, it has also not explicitly agreed to any of the details, instead saying only that the two countries had reached a reciprocal trade agreement framework.

Nonetheless, on July 31, Trump signed another executive order adjusting the reciprocal tariff rates for 70 countries and regions, including the announced 20 percent tariff on Vietnam. This made the new rate, effective August 7, official and effective despite the absence of an actual trade agreement. The executive order also included a 40 percent duty on any goods found to have been transshipped to evade duties, penalties, fees, or other charges.

Goods previously exempted from the reciprocal tariff treatment continue to be exempt.

While no official statement has been released on a trade deal, negotiations appear to have stagnated, with little information on any high-level meetings having been released to the public in recent weeks.

How Vietnam became a target of Trump’s tariff plan

Vietnam was vulnerable to Trump’s tariff plan from the outset. According to Reuters, Vietnam’s trade-weighted average Most-Favored Nation (MFN) tariff is 5.1 percent, compared to the US’s 2.2 percent. This provided grounds for the US to significantly increase the effective tariff rates on Vietnamese goods.

However, the non-tariff barriers mentioned in the reciprocal tariff plan may also have implicated Vietnam. Firstly, the plan takes aim at “policies and practices that cause exchange rates to deviate from their market value, to the detriment of Americans”. In a report released on January 15, 2021, the result of an investigation launched under Trump, the US Trade Representative (USTR) concluded that Vietnam was undervaluing its currency to achieve an economic advantage and that these actions contributed to a trade imbalance with the US and other countries. As a result, the US listed Vietnam as a “currency manipulator”.

In addition to the investigation into Vietnam’s purported currency manipulation, the USTR launched a Section 301 investigation related to Vietnam’s import and use of timber, claiming that Vietnam may be using illegally harvested or traded timber as inputs for its manufacturing of products that are exported to the US.

However, although the report found that Vietnam’s behavior was “actionable” under Section 301, the USTR also stated on January 19, 2021, Trump’s last day in office, that it would not take any actions in relation to the findings. This dispute was later resolved when Biden came into office, and in April 2021, the USTR said there was “insufficient evidence” to classify Vietnam as a currency manipulator.

Despite these factors appearing to make Vietnam a target of Trump’s reciprocal tariff plan, the considerations for imposing such a high rate appear to be much simpler. The 90 percent rate that the US claims Vietnam charges the US – the basis for the 46 percent rate – was reached simply by dividing the US’s trade deficit by its imports from Vietnam, based on 2024 data from the USTR.

This suggests Vietnam may have to come up with ways to reduce its surplus with the US or buy more American products to negotiate a potential deal with Trump.

Background: US-Vietnam trade in 2024

In 2024, the US was Vietnam’s second-largest trading partner after China and the largest destination for Vietnamese exports. Meanwhile, Vietnam ranked eighth among the United States' top trading partners. According to the US Commerce Department’s International Trade Administration (ITA), total bilateral trade between the two countries reached US$149.6 billion, marking a 20.4 percent increase from 2023.

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Vietnam also became the US's sixth-largest source of imports last year, up from seventh place in 2023, with total imports reaching US$136.6 billion. Vietnam’s trade surplus with the US increased by US$18.9 billion from 2023, setting a new record of US$123.5 billion.

The US’s top imports from Vietnam were electric machinery, nuclear reactors, furniture and bedding, footwear, and apparel and accessories.

The US exported only US$13.1 billion worth of goods to Vietnam in 2024, though this was an increase of 33.1 percent from 2023. The US’s top exports to Vietnam were electric machinery, plastics, food industry residues, oil seeds, nuclear reactors, boilers, and machinery.

Impact of the tariffs on Vietnam

Reciprocal tariffs

The current 20 percent reciprocal tariff rate on Vietnamese goods is poised to have a significant impact on Vietnam’s export-driven economy, especially in key sectors that are heavily reliant on the US market. Industries such as textiles, footwear, and furniture—which have steadily expanded over the past two decades—are particularly exposed. These sectors have benefitted from Vietnam’s reputation as a low-cost, high-efficiency manufacturing hub, but a steep increase in tariffs will strain profit margins, reduce order volumes, and potentially lead to job losses.

Vietnamese exporters may attempt to diversify their markets by targeting consumers in Europe, Asia, or the Middle East. However, this transition will likely be challenging. Many of these markets are already highly competitive, and logistical constraints such as shipping capacity, infrastructure, and regulatory differences could hinder quick adaptation. Additionally, few markets offer the same scale of demand as the US, limiting the potential to offset the losses.

Despite the potential disruption, it is still possible that the two sides will reach a more comprehensive trade agreement, which could see Vietnam commit to reducing its trade surplus with the US by purchasing more American goods, particularly in politically sensitive sectors such as agriculture or energy, in exchange for a more favorable tariff rate.

In the short term, Vietnamese exporters and policymakers will face growing uncertainty. The tariff not only complicates trade flows but also calls into question the stability of Vietnam’s access to one of its most important export markets. As companies weigh their options, the broader implications for investment, supply chain decisions, and regional trade strategies are likely to unfold in the months ahead.

Steel and aluminum tariffs

Vietnam was the US’s fifth-largest source of steel in 2024, rising from ninth place in 2023. In 2024, US imports of steel mill products for domestic consumption from Vietnam skyrocketed by 143.4 percent from the previous year to reach 1.2 million metric tons, valued at US$1.13 billion, according to data from the ITA. Almost 75 percent was composed of flat carbon and alloy steel. Vietnam also exports a smaller amount of aluminum to the US. In 2024, Vietnam’s total exports of aluminum products for domestic consumption to the US dropped by 1.7 percent from 2023 to 35,593 metric tons, valued at US$142.9 million.

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It is important to note that Vietnam’s steel and aluminum exports to the US were already subject to tariffs of 25 percent and 10 percent, respectively. In 2018, during Trump’s first term, the US imposed Section 232 tariffs on steel and aluminum imports from all countries, citing national security concerns. While some countries later received exemptions, tariffs on many Vietnamese steel products have remained in place ever since.

As a result, the impact on Vietnam’s steel exports to the US is likely to be limited, especially given that exports have continued to grow rapidly despite the tariff. The tariff hike could even benefit Vietnamese exporters by leveling the playing field with other countries, which will now face the same 25 percent tariff. Notably, major US steel suppliers such as Canada and Mexico, which were previously granted exemptions, will now be subject to the tariff.

By contrast, Vietnamese aluminum exports to the US are more vulnerable. The tariff rate will increase by 15 percentage points, posing a greater challenge—especially since Vietnam exports smaller quantities of aluminum, and shipments had already declined in 2024 compared to the previous year, even before the tariff increase.

However, the global steel and aluminum markets are likely to experience significant shifts due to these tariffs. If the US achieves Trump’s stated goal of expanding its domestic steel and aluminum industries, major US suppliers will seek new markets for their products, intensifying competition for Vietnamese exports.

25 percent auto tariffs

The 25 percent tariff on imported automobiles and certain auto parts is expected to have a minimal impact on Vietnam’s trade with the United States. Vietnam is not a major exporter of vehicles or automotive components to the US market.

According to data from the ITC Trade Map, the US imported approximately US$1.1 billion worth of vehicles and components from Vietnam in 2024. This accounts for only a small percentage of overall US vehicle and vehicle parts imports, which are dominated by countries such as Japan, South Korea, and Germany. Vietnam currently exports few, if any, complete vehicles to the US.

However, while the impact on Vietnam’s overall exports may be limited, the tariff will still affect its automotive exports specifically. The US is a key destination, accounting for around a fifth of Vietnam’s total vehicle and auto parts exports.

The tariff is primarily aimed at large auto-exporting countries, including Japan, South Korea, and Germany, which maintain significant automotive trade surpluses with the US. While Vietnam is likely to feel little direct impact, it could face indirect effects from potential disruptions to global supply chains or shifts in demand across the international automotive market.

40 percent transshipment tariff

Vietnam’s exports to the US have expanded rapidly in recent years, in large part due to supply chain shifts following the US-China trade war in 2018. Since that time, there has been a clear correlation between rising Chinese exports to Vietnam and Vietnam’s surging exports to the US. From 2018 to 2024, China’s exports to Vietnam grew at a compound annual growth rate (CAGR) of 18.7 percent, while US imports from Vietnam rose at a CAGR of 15.7 percent over the same period.

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This correlation is also evident in more recent monthly trade data. Over the past 18 months, Vietnam has seen a surge in imports of electrical machinery and equipment from China, including integrated circuits, solar panel components, and computers - products that are also among Vietnam’s top exports to the US. In May 2025, Vietnam’s imports of these products from China jumped 53.5 percent year-on-year, with the sharpest monthly increase occurring in March 2025, when shipments rose 36 percent from February, coinciding with the imposition of the 20 percent “fentanyl tariffs” on Chinese goods.

The US’s imports of these same products from Vietnam have also grown markedly. From February to March 2025, imports of electrical equipment and machinery rose by 15.7 percent, and by May 2025, they reached US$4.8 billion, up 35 percent year-on-year. While it is not clear how much processing or value addition occurs in Vietnam before re-export, the trade data strongly suggests that Vietnam has become a key transshipment hub for Chinese goods.

The proposed 40 percent transshipment tariff, therefore, has the potential to disrupt Vietnam’s export trajectory. Some exporters and re-exporters in Vietnam will inevitably be affected, particularly those engaged in limited processing or assembly of Chinese-origin goods. At the same time, much depends on the implementation details, specifically, how the US Customs and Border Protection (CBP) applies rules of origin and enforces the tariff.

If enforcement is strict and broad, the tariff could significantly dampen Vietnam’s role as a conduit for Chinese exports, thereby slowing its overall export growth to the US. If implementation is narrower, targeting only minimal-processing cases, then the impact may be more limited, though still notable for specific sectors such as electronics and machinery. In either case, the tariff introduces a high level of uncertainty for Vietnamese exporters who have benefited most from the shifting trade dynamics since 2018.

Possible further import tariffs and trade deals

Given his focus on targeting economies with a trade surplus with the US, there remains the distinct possibility that Trump will choose to raise tariffs targeting Vietnamese imports again. As discussed, Vietnam’s trade surplus in 2024 hit a record high. It has also become one of the US’s top sources for imports, meaning it is unlikely to go under Trump’s radar.

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Despite a review launched under the Biden administration, the US continues to label Vietnam as a non-market economy (NME). Under US law, NMEs are subject to certain antidumping and countervailing duties. This means the Trump administration could seek to impose tariffs on Vietnamese goods under this legal framework.

It is also possible that Vietnam’s exporters will become caught in the crosshairs of mounting US-China trade tensions. Trump’s return to the White House also likely does away with any potential regional trade deals. While the US’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was unlikely even under Biden due to bipartisan dislike of the treaty, the previous administration did pursue its own trade deal with Asia Pacific nations – the Indo-Pacific Economic Framework (IPEF). Launched in May 2022, the IPEF sought to develop trade between the fourteen member nations by facilitating the provision of trade licenses, reducing customs red tape, and improving regulatory transparency in the region, among other measures. In particular, the IPEF sought to expand trade in agricultural products, of which the US is a major exporter.

Although the IPEF did not propose to reduce or eliminate tariffs - unlike the CPTPP - Trump is likely to walk away from the negotiations, given his penchant for undoing the previous administration’s actions.

Nonetheless, it is possible that Vietnam could strike a bilateral trade deal with the US. In a meeting between the US Ambassador to Vietnam Marc Knapper and Vietnam’s trade minister Nguyen Hong Dien on February 14, the ambassador reportedly stated that the US’s trade policy does not target Vietnam specifically.

Moreover, Nguyen suggested that Vietnam is willing to increase imports from the US, particularly agricultural products. Knapper also encouraged Vietnam to “expedite legal frameworks to facilitate U.S. investment in new sectors including energy, semiconductor, AI, and aviation.”

On May 23, 2025, Vietnam’s Trade Minister Nguyen Hong Dien visited Washington and met with US Commerce Secretary Howard Lutnick as well as several US senators to address mounting trade tensions. During these talks, Vietnam said it would commit to narrowing trade surplus with the US and pledged to intensify efforts to combat trade fraud and illegal transshipment. The Vietnamese delegation also urged the US to recognize Vietnam as a market economy and to remove it from the US’s strategic export control lists, arguing that Vietnam’s economic reforms warranted such status upgrades. These measures, they argued, would foster a more balanced, fair, and sustainable bilateral trade relationship.

Should Vietnam agree to make concessions such as buying more US goods and lowering barriers to entry for US businesses in Vietnam, it is possible the country can convince Trump to reduce the higher reciprocal tariff, as well as other fees and duties.

If you are unsure about the implications of the US tariffs for your business, talk about your strategy with our experts.

(This article was originally published February 25, 2025. It was last updated August 26, 2025.)

This article first appeared on Vietnam Briefing, our sister platform.