Although the 20% rate is still higher than the UK’s 10%, it is significantly lower than the 46% reciprocal tariff rate imposed on Apr 3 and below China’s current tariff exposure. “Vietnam secured 20% tariff level, which is much lower than 46% on reciprocal tariff day but higher than the UK’s 10% level, and lower than China’s tariff level,” say the economists.
Vietnam has become the second country in the world and the first in Asia to secure a bilateral trade agreement with the US under the new tariff regime introduced by the Trump administration, reducing a previously imposed 46% reciprocal tariff rate to 20%. The agreement makes Vietnam the second country after the UK to formalise a deal and comes as a lifeline for an economy where exports account for 84% of GDP and shipments to the US alone made up 30% of GDP in 2024.
Vietnam’s vulnerability to US trade measures stems not just from domestic exporters, but also from foreign direct investment within its borders. “Vietnam is the most trade exposed country in Asia – exports are 84% of GDP and US shipment made up a staggering 30% of GDP in 2024,” Natixis economists Trinh Nguyen and Kelvin Tong wrote in a July 4 report. “Vietnam has been the most motivated country to ensure better access to US markets.”
