Vietnam’s 20% tariff deal with Trump lacks full details and a final agreement text

Vietnam rushed to meet the July 9 trade deadline set by U.S. President Donald Trump, hoping to escape a round of harsh reciprocal tariffs. But that early move has now left officials in Hanoi and major manufacturers facing more confusion than clarity.

Vietnam was one of only two countries to strike a last-minute agreement before the deadline, avoiding the initial 46% tariff threat. Trump publicly announced the new blanket rate at 20%. Still, no full agreement has been released, and neither side has explained the fine print, leaving businesses without answers just weeks ahead of an August 1 reset.

Thanh Cong Garment, a key Vietnamese supplier for companies like Adidas, Columbia, and Calvin Klein, expected relief. Instead, it’s stuck in limbo. Company chair Tran Nhu Tung said there’s no certainty whether the 20% tariff will apply to all goods or increase for products made with Chinese materials.

“For the products that [have] materials from China but manufactured in Vietnam, what is the tariff to export to the US? 20 per cent or 30 per cent or 35 per cent?” Tung asked. “We need to wait.” The issue is not hypothetical. Vietnam’s garment industry depends on China for about 70% of its raw materials, including zippers, cotton yarn, and elastic.

Unclear transshipment clause triggers panic in factories

A clause in the Trump deal threatens to apply a 40% tariff on “transshipped” goods. But no one has defined what transshipment means. The Vietnamese government hasn’t offered clarification, and the U.S. hasn’t released any details either. This has raised fears among manufacturers that goods containing Chinese components—even if legally assembled in Vietnam—will get hit with heavier tariffs.

Rich McClellan, founder of RMAC Advisory, which advises both companies and Vietnam’s government, said, “There is a sigh of relief that at least we know what the answer is for Vietnam . . . but there is still quite a lot of uncertainty in the agreement that exists right now.” He called the transshipment clause “the most ambiguous and most potentially risky portion of this agreement.”

Economist Michael Wan from MUFG said the impact of the 40% clause depends on how far the Trump administration takes its definition. If it targets blatant cases like fake “Made in Vietnam” labeling, the damage may be limited. But if it’s based on foreign material thresholds, then Vietnamese exports could take a serious hit.

Vietnam’s manufacturing sector has been built around serving U.S. demand. Nearly one-third of all Vietnamese exports go to the U.S., and its 2024 trade surplus with America hit $123 billion, making it the third-largest behind China and Mexico.

Now, that success is being viewed with suspicion in Washington, especially since almost one in three new manufacturing projects in Vietnam last year were funded by Chinese investors.

Hanoi scrambles for clarity before August deadline

Prime Minister Pham Minh Chinh met with the U.S.-Asean Business Council in Hanoi on Friday to push for clearer terms. The group represents companies like Apple, Amazon, and Boeing. Pham asked the council to support Vietnam’s efforts to finalize a full agreement, lower the tariff rate, and prevent actions that damage trade relations.

Trump’s public announcement caught Vietnamese leaders off guard. Pham said the countries had agreed on a framework but warned that detailed rates for specific products were still missing. He also asked U.S. companies to push the White House to recognize Vietnam as a market economy, which would help reduce pressure from trade defense tools.

As of now, investors haven’t pulled back. Foreign direct investment in Vietnam rose almost 30% to $21.5 billion in the first half of the year. But U.S. retailers are already sounding alarms. Steve Greenspon, founder of Honey-Can-Do, said:

“A 20 per cent tariff will result in higher prices and inflation on goods. This will certainly lead to reduced demand for goods, hurting American businesses and jobs.”

Thanh Cong Garment has already seen a drop of 15–20% in U.S. orders for the third quarter, due to a shipping rush before the July deadline and the wait for clarification.

Vietnam’s early move may have helped it avoid the worst threats from Washington—for now. But with no full text, no product list, and no guarantee of better terms than its neighbors, the final outcome is still unknown.

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