Global attention turned to Vietnam today (July 3, 2025), after President Trump announced a new trade agreement with Hanoi, just days before the reinstatement of mutual tariffs between Washington and several trade partners. Under the deal, the U.S. will impose a 20% tariff on imports from Vietnam — significantly lower than the 46% rate previously imposed in early April. Meanwhile, American exports to Vietnam will remain tariff-free.
President Trump also stated that Vietnam agreed to apply a 40% tariff on goods originating from other countries but shipped through Vietnam before being sent to the U.S. China is reportedly known to use this practice, called transshipping, to bypass trade barriers.
Vietnam is one of the few countries to have reached a trade deal with the White House as the 90-day temporary suspension by Trump nears its end. Many nations are now left wondering how their future trade relations with the world’s largest economy might unfold.
“What we learned from the Vietnam deal is that, if anything, tariffs are going up from here, not down,” said Sebastian Raedler, head of European equity strategy at BofA, on CNBC’s “Europe Early Edition.”
Mark Williams, Asia chief economist at Capital Economics, added that other countries may now feel more confident in negotiating better terms. “Other countries may believe they can secure a tariff rate below the 20% that President Trump claims Vietnam accepted,” he noted, pointing out that Vietnam had a relatively weak bargaining position due to its heavy reliance on U.S. trade.
The agreement could raise concerns among other emerging economies, according to economists and strategists at Citi. “Overall, we believe there is more for EM Asia to worry about than to expect gains, if this deal reflects what is coming soon,” they wrote in a note.
While the development removes some uncertainty and suggests that more deals could emerge in the coming days, the 20% tariff is higher than the expected 10%, according to Citi experts. They added that the separate 40% tariff on transshipped goods indicates that other countries may be asked to agree to similar rates.
“Thailand, followed by Malaysia, may be more exposed than other comparable East Asian countries (excluding Vietnam). A separate and more punitive tariff on transshipped goods was the least expected outcome by the market,” the note read.
“Additionally, there could be secondary effects on other exporters who have set up factories in Vietnam over recent years,” such as South Korea, it continued.
However, experts speaking to CNBC expect more trade agreements to emerge in the coming days, with Williams noting that the U.S. appears open to making these “provisional” deals rather than full-scale ones.
One country speculated as a possible next target for a deal is India, said Trinh Nguyen, senior emerging Asia economist at Natixis CIB. However, agricultural issues could pose a challenge, as India “would struggle to allow U.S. access to its markets without domestic backlash.”
As for Europe, while the U.S.-Vietnam deal hints at more potential agreements for Asian countries, it does not necessarily mean the same for the European Union, said Lavanya Venkateswaran, senior ASEAN economist at OCBC Bank.
“Vietnamese authorities were clear about their intention to negotiate with the U.S., even before the mutual announcements made in April,” she said via email, adding that the same applies to other regional economies like Indonesia and Malaysia.
“Compared to these economies, the case with the EU has not always been smooth, and the U.S. has been more public in its criticism of the EU at various points in recent months,” Venkateswaran noted.
Nguyen added that “Vietnam shows that it’s very hard for Europe to get what it wants — i.e., no tariffs.” Some tariffs are likely, she said, and although the EU could retaliate by applying equal tariffs on the U.S., she expects the bloc to agree on a 10% tariff and “try to get wins from the sector side.”
Trade negotiations between the EU and the U.S. are difficult and slow-moving, with sources telling CNBC that a “political” deal with minimal initial details may be the EU’s best hope at this stage.
Analysts and economists have also expressed uncertainty regarding the likelihood of a trade agreement, given key sticking points such as regulation of big tech, taxation, and widely incompatible worldviews.
Trump has demanded tariffs as high as 50% on the EU, while the bloc has threatened extensive countermeasures — which have also been suspended until next week.