President Donald Trump announced Wednesday, July 2, that the United States has reached a trade agreement with Vietnam, which includes a new 20% tariff on goods imported from Vietnam.
According to Trump’s statement on Truth Social, the deal will allow the U.S. tariff-free access to Vietnamese markets. Vietnam also agreed to a 40% tariff on goods that originated in other countries but were shipped through Vietnam before entering the U.S.—a process called transshipping, which is often used to dodge trade barriers.
China, one of the biggest exporters to the U.S., has reportedly used Vietnam for this purpose.
Trump Says, ‘Vietnam will pay” the 20% tariff’
Trump claimed, “Vietnam will pay” the 20% tariff, but in practice, tariffs are taxes on foreign goods paid by U.S. importers.
This agreement comes just days before a 90-day pause on many of Trump’s so-called reciprocal tariffs was set to expire. Without a new deal, tariffs on imports from dozens of countries would have jumped sharply. Under the existing system, Vietnamese goods faced a 46% blanket tariff, which had been temporarily reduced to 10% for the 90-day window. Raising the tariff to 20% will increase costs for U.S. importers, which could eventually be passed on to consumers or suppliers.
Despite the tariff news, the S&P 500 saw a slight uptick.
Trump’s full post read: “It is my Great Honor to announce that I have just 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. It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam. Dealing with General Secretary To Lam, which I did personally, was an absolute pleasure. Thank you for your attention to this matter!”
🚨 BREAKING: President Trump’s trade deal with VIETNAM…US gets “TOTAL ACCESS” to their markets for trade WITH ZERO TARIFFS.
– Vietnam pays 20% TARIFF
– They pay 40% tariff on transshippingHoly smokes. pic.twitter.com/CZkt3v3Fn0
— Eric Daugherty (@EricLDaugh) July 2, 2025
What is Donald Trump’s new deal about?
Trump didn’t specify when the deal would take effect or whether it’s been officially signed.
He has suggested he might ignore or revise the looming deadline for his reciprocal tariffs to revert to higher rates. The 90-day pause, lowering tariffs for most countries to 10%, was put in place in early April to allow time for negotiations.
So far, the Trump administration has only finalized revised trade deals with China and the U.K., though officials say more agreements are close.
Vietnam, whose exports to the U.S. made up about 30% of its GDP last year, is especially exposed to Trump’s tariffs.
Critics of Trump’s unpredictable tariff policy warn the move will drive up prices for U.S. consumers and add economic uncertainty. The administration and its supporters argue tariffs haven’t caused inflation, instead bringing in billions for the U.S. government.
Retail consultants AlixPartners estimated for CNBC that a 10% U.S. tariff on Vietnamese goods would raise the price of an imported men’s sweater by about 8%. Under Trump’s original 46% tariff, the price could jump roughly 35%.
Federal Reserve Chairman Jerome Powell said Tuesday that officials expect the impact of Trump’s tariffs to become more visible as summer progresses. Prices on some goods, such as clothing and shoes, have already started inching up, according to CNBC.
Some analysts think the lack of broader price hikes so far is due to companies stockpiling goods before tariffs took effect, and the lag time before tariffs fully ripple through the economy.
Stocks for major apparel and footwear companies reacted sharply after Trump’s announcement. Nike shares rose 2% in New York trading, while Gap and Lululemon held steady.
