Vietnam’s leadership was taken by surprise by the announcement of US President Donald Trump last week that he agreed with a 20%rate, and the Southeast Asia nation still seeks to reduce this tax rate, according to people familiar with the matter.
Shortly after last Wednesday’s connection with Trump, Vietnam Party Chief, To Lam, told his negotiating team to continue working to reduce the tariff, the sources said anonymity due to the confidentiality of negotiations. The value of 20% was a surprise, as Vietnam believed it had secured a more favorable tariff range, the sources said.
Before the connection, Vietnam had been pressing for a tariff in the range of 10% to 15%.
There was little mention of the 20% rate in the state media of Vietnam. In a government memorandum seen by Bloomberg News, sent to the local press, there are instructions not to publish content that is poorly clear, speculative or without consensus between Vietnam and the USA.
The Vietnam Foreign Ministry did not immediately respond to a commentary request.
The Southeast Asian nation, an exporting power that last year had the third largest commercial surplus with the US, was the second country, after the United Kingdom, with which Trump announced a trade agreement. Since then, Trump has issued charts of tariffs to dozens of commercial partners, applying rates of up to 50% before August 1.
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The day after Trump’s publication on the Vietnam Social Truth, in which he called Lam “an absolute pleasure” to negotiate, the country’s Foreign Ministry said commercial negotiators were still coordinating with their American peers to finalize the details of the agreement.
Since then, Vietnamese leaders have avoided the theme in official comments. Prime Minister Pham Minh Chinh focused on Vietnam’s efforts to diversify export markets and supply chains to adapt to the new tariff policy, and his comments were echoed a few days later by a deputy minister of commerce.
The rate announced by Trump of 20% would replace the current base of 10%, but would still add to other pre-existing rates, such as “most favored nation,” a US official who asked for anonymity to discuss the issue. This would raise the average effective average rate above 20%. US sectoral tariffs, such as cars and steel, are separated from the 20%but not cumulative rate – importers pay one or the other.
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The White House did not immediately respond to a request for commentary sent from business hours. Secretary of State Marco Rubio said on Friday that the issue of trade was raised during a meeting with his Vietnamese counterpart on the fringes of a regional forum in Malaysia, but that was not the focus of the discussions.
“Clearly, Vietnam feels that if he enters a deal with the United States, he wants to have a rate that is at least as good as, if not better, than other countries who have no commercial agreement with us,” he told reporters, adding that trade was not the purpose of the meeting.
Vietnam is trying to navigate Washington’s demands while maintaining good relations with China, its largest commercial partner. During the negotiations, the US required more Hanoi actions to prevent Chinese products from being redirected and repailed by Vietnam to avoid higher tariffs. Beijing said he is analyzing the trade agreement and will retaliate if his interests are harmed.
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Parallel to the search for a smaller fare, the Vietnam Ministry of Commerce is holding meetings with customs and commercial industry groups on regulatory measures to harden the rules against fraud at the source of goods and prevent illegal overflows, sources said.
More than a week after Trump’s initial revelation, neither side has published a detailed sketch, offering little clarity on how 20% rate or 40% rate on products considered overflowed by the country will be applied or supervised.
On Thursday, Trump told NBC News that he is considering general rates of 15% to 20% for most business partners who have not yet been informed about their rates. The current global minimum rate for almost all US business partners is 10%.
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The confusion was not discouraged the investors. The shares rose to a maximum of three years, and the 20% rate was played by foreign investors as “a good deal for Vietnam,” a leading fund manager said in an investment symposium in Hanoi on Wednesday.
While in Brazil for the BRICS summit, Chinh and Chinese Prime Minister Li Qiang agreed to strengthen economic, commercial and investment ties between the two countries during a meeting on the margin of the event. They also agreed to prioritize the construction of a railway connection between the two countries, one of the many narrower signs of cooperation between the neighbors, emphasizing Vietnam’s need to keep Beijing by his side.
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