Positive negotiations to finalise a reciprocal trade agreement

According to Viet Nam’s Ministry of Industry and Trade, since late April, Viet Nam and the US have held many rounds of reciprocal trade negotiations at both technical and ministerial levels.

Both sides have held multiple rounds of reciprocal trade negotiations at both technical and ministerial levels since late April 2025. Both sides have seen progress in discussing tariffs, rules of origin, customs procedures, agriculture, non-tariff measures, digital trade, services and investment, intellectual property, sustainable development, supply chains, and broader commercial ties.

In the coming period, the two sides will continue discussions to finalise a reciprocal trade agreement grounded in the principles of openness, constructiveness, equality, respect for independence, self-reliance, and political systems, mutual benefit, and consideration of each other's development levels, the ministry said.

They are to bolster stable, mutually beneficial economic, trade, and investment relations consistent with the US-Viet Nam Comprehensive Strategic Partnership.

Deputy Director of the National Statistics Office under the Ministry of Finance Le Trung Hieu noted that the average 20% US tariff on Vietnamese exports would reduce Viet Nam’s export turnover to this market by 9-10%, while potentially discouraging foreign direct investment (FDI) into Viet Nam, especially from US, Chinese, and the Republic of Korea enterprises due to increased export costs.

However, with 17 signed Free Trade Agreements (FTAs), Viet Nam has many opportunities to expand export markets, reduce tariff barriers, and stimulate trade and investment growth, thus helping to maintain a high economic growth rate.

Hieu emphasised the need for measures encouraging investment, diversifying export markets, exploiting the domestic market, and improving the business environment. These steps would not only mitigate the negative impacts of US tariff policies but also facilitate economic restructuring towards stronger internal resources and sustainable growth.

Meanwhile, Deputy Chief of Office of the Board of Directors of the Viet Nam National Textile and Garment Group (Vinatex) Hoang Manh Cam assessed that demand for textiles and garments in the US market is likely to decline due to higher prices, especially in the latter months of 2025, since many brands increased imports in the first half of the year to take advantage of the 90-day period during which a 10% tariff was applied.

Initially, Viet Nam has less advantage as its 20% tariff is higher than Turkey’s (15%), Cambodia’s and Indonesia’s (both 19%), equal to direct competitor Bangladesh (20%), and only lower than India (25%).

In Africa, which has low-cost textile production, some countries benefit from 10-15% tariffs. Thus, although the production capacity and market share of African countries remain limited, orders may shift from higher-tariff countries.

Regarding transshipment tariffs, these will apply to all countries, not only Viet Nam, but the specific calculation method and threshold have yet to be announced in White House documents dated July 31, so detailed guidance from competent authorities is still awaited.

Vietnamese enterprises move to adapt new tariff policy

In response to the new US reciprocal tariff policy, Vietnamese enterprises, especially exporters, are focusing on adaptation plans to reduce tariff-related risks.

Deputy General Director of the Viet Nam Rubber Group (VRG) Tran Thanh Phung said that the new US tariff policy could reduce natural rubber demand by 2.5-3% per year, because US importers will face higher costs, prioritising imports from other countries or pressuring input prices to offset tariffs.

Rubber enterprises need to ensure standardisation and transparency in supply chains, such as establishing traceability systems from plantations to factories; reducing dependence on imported raw materials or those of unclear origin. Transparency will be the most effective shield, as the US side is highly sensitive to goods with unclear origin or provenance.

In the seafood sector, Director of Tan An Seafood Joint Stock Company Ngo Hung Dung noted that a 20% tariff will directly affect people and businesses in aquaculture because processing and exporting companies will reduce purchase prices of raw materials to stabilise prices.

However, if this tariff level remains stable for a long time, it will be favourable for enterprises, allowing them to proactively adapt, implement long-term strategies, and address weaknesses in markets and products.

To proactively respond to the new US tariff policy, enterprises need to swiftly integrate modern technology into production. Aquaculture businesses are ready to invest in technological innovation to reform production processes, improve quality and reduce input costs.

Functional agencies should reform certain mechanisms and policies for investment loans, scientific and technological innovation, replicate advanced production models, and soon establish stable input standards and procedures for aquatic seedlings.

Vietnamese wood exporters are also facing multiple risks from the US reciprocal tariff policy due to heavy dependence on this market and internal supply chain limitations.

Vice Chairman and General Secretary of the Viet Nam Timber and Forest Product Association (VIFORES) Ngo Sy Hoai shared that the 20% tariff will cause many difficulties for exporters because the industry’s profit margins are estimated at only 5-10%.

In the short term, exporters need to renegotiate with US importers to share difficulties. In the long run, this could be an opportunity for timber enterprises to restructure towards in-depth development rather than merely subcontracting as before.

Vietnamese enterprises need to promote innovation, creativity, apply advanced science and technology, improve corporate governance capabilities to enhance labour productivity, and create higher value since labour productivity in the wood sector remains low compared to the world.

It is also crucial to diversify markets to avoid overdependence on a few main markets as is currently the case.