U.S. and Vietnam Reach Tariff Agreement Under IEEPA Framework, with Vietnam Potentially Ensnared in a "20% Tariff Trap"

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2025-08-10 10:08:09 browse：　

On July 2 (U.S. time), Donald Trump announced on the social media platform Truth Social that the United States had reached a reciprocal tariff agreement with Vietnam under the International Emergency Economic Powers Act (IEEPA). According to the agreement, tariffs on goods originating from Vietnam will be reduced from the previous 46% to 20%; however, goods transshipped through Vietnam will face tariffs as high as 40%.

This tariff adjustment represents the latest development in the 90-day tariff suspension period set to expire on July 9, 2025. As of July 2, U.S. Customs had not yet issued an official notice, but barring further amendments, the tariff measures will take effect automatically upon expiration. Notably, the legality of IEEPA-based reciprocal tariffs remains controversial. The policy has already been ruled unlawful by the U.S. Court of International Trade and is currently under review by the Federal Circuit Court of Appeals, with a hearing scheduled for July 31, 2025.

While the reduction of tariffs on Vietnamese-origin goods from 46% to 20% marks a concession, the 40% tariff on goods transshipped through Vietnam effectively continues to target Chinese companies that have established factories in Vietnam to circumvent steep U.S. tariffs. This represents another direct blow to China’s manufacturing relocation strategies.

Additionally, the policy will impact other enterprises investing in manufacturing facilities in Vietnam. Take electronics, computers, and their components as an example—Vietnam’s highest-value export sector, with a total export value of $72.6 billion in 2024. This growth has been largely driven by significant manufacturing deployments in Vietnam by non-Chinese multinationals such as Samsung, LG, and Apple.

Editor: Lucas Zhang
Release Date: July 2, 2025