Opportunities Amid Tariff Risks: Vietnam-US Trade Negotiations Start

After the US announced a 90-day pause on the 46 percent tariff rates imposed on Vietnam’s imports, officials from both sides are actively engaging in negotiations to find mutually beneficial solutions, aiming to achieve a more balanced and sustainable trade relationship.

Vietnam’s trade surplus with the US surged to a new record in 2024, placing it fourth in terms of trade imbalance with the US, behind only China, the European Union (EU), and Mexico. According to official data, the trade surplus last year increased by almost 20 percent, reaching over US$123 billion. The growth rate is significantly higher than that of China, the EU, and Mexico, which were 6, 13, and 12.5 percent, respectively.

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Just days after putting the 46 percent tariff on hold, the US Department of Commerce announced on April 21 that it would implement significant tariffs on solar panels imported from four Southeast Asian countries, including Vietnam. Reports indicate that the average tariff for Vietnamese manufacturers is at 395.9 percent, with four companies facing rates reaching as high as 800 percent. Vietnam’s government, along with its businesses, is exploring offsetting measures in the hope of avoiding regrettable outcomes from the latest tensions, mitigating unwanted deterioration in the bilateral relations with the US.

This article examines the country’s ongoing efforts, as well as the new opportunities arising from the latest steps to improve the trade balance between the two countries.

Vietnam and the US begin tariff negotiations

Both Vietnam and the US have swiftly formed task forces to engage in further negotiations following a 90-day pause. On April 24, US Trade Representative Jamieson L. Greer held a virtual meeting with Vietnam’s Minister of Industry and Trade, Nguyen Hong Dien, to discuss their bilateral trade relationship. The meeting outlined the next steps for collaboration between the US Trade Representative (USTR) and Vietnam’s Ministry of Industry and Trade (MOIT) following President Trump’s call with General Secretary of the Communist Party of Vietnam, To Lam, on April 4.

Both parties recognized the importance of quickly advancing toward reciprocal and balanced trade between the United States and Vietnam. The ministers directed their teams to engage in technical discussions in the upcoming days to explore ways to enhance market access and tackle unfair trade practices, including trade fraud, counterfeiting, and other issues important to the United States.

On May 24, Vietnamese Prime Minister Pham Minh Chinh praised the second round of negotiations that took place in Washington, D.C., from May 19 to 20. He highlighted that the talks were constructive for both parties. The Prime Minister emphasized the principle of “harmonizing benefits and sharing risks,” while also ensuring the protection of Vietnam’s core interests in the ongoing trade discussions with the United States.

The direct pledge by Vietnam’s Prime Minister

On March 18, during a working meeting with representatives from 64 US companies organized by the US-ASEAN Business Council, PM Chinh urged US businesses to keep advising and providing policy suggestions to the Vietnamese government to enhance its institutions and policies.

Notably, in an effort to garner more support for Vietnam’s initiatives, Prime Minister Chinh has made direct appeals to US businesses regarding measures to improve the trade balance between the two countries. Accordingly, he encourages U.S. businesses to take proactive steps to:

• Engage with the Trump administration to promote sustainable economic, trade, and investment cooperation between the two nations;
• Establish a new bilateral trade framework that better addresses mutual needs and realistic conditions;
• Advocate against the implementation of trade defense measures on Vietnamese exports and actions that could jeopardize the strong relationship between the two countries; and
• Support a swift recognition of Vietnam’s market economy status and the removal of Vietnam from the US Department of Commerce’s list of high-tech export restrictions.

In addition, PM Chinh has affirmed his government’s commitment to promoting balanced, harmonious, and sustainable development of US-Vietnam economic and trade relations through specific action programs, addressing concerns of US firms, and enhancing the quality and effectiveness of investment cooperation with the US. He emphasized that Vietnam consistently views the US as a leading, important, and strategic partner, particularly in terms of economics, trade, and investment.

Vietnam implements incentives for US imports

On March 31, 2025, Vietnam’s government issued a new decree, lowering most-favored nation (MFN) tariff rates for essential goods. The revisions aim to support economic growth and enhance trade competitiveness. Director Nguyen Quoc Hung stated that the reductions align Vietnam’s tariff structure with international standards while ensuring fairness with partners regardless of a Free Trade Agreement (FTA).

As Vietnam and the US have not yet entered into any FTA together, American exports are subject to MFN tariffs, which create a competitive disadvantage. The reduction of the MFN rate is expected to mitigate this imbalance.

To learn more about the MFN tariff reductions, please read: Vietnam Reduces MFN Tariff Rates on Strategic Imports: Decree 73

In addition to import taxes, the Ministry of Finance (MOF) is also reevaluating excise taxes, environmental protection taxes, and value-added taxes to create a balanced and competitive tariff system. The government has proposed extending the current VAT reduction on certain goods and services subject to the 10 percent rate from July 1, 2025, to December 31, 2026.

New deals to balance out trade between the US and Vietnam

At a meeting on March 14 between Vietnam’s Industry and Trade Minister Nguyen Hong Dien and US Trade Representative Jamieson L. Greer, Vietnamese and US companies signed cooperation agreements and purchase contracts totaling US$54.3 billion, which include:

• The acquisition of machinery, equipment, raw materials, services, and goods valued at US$4.15 billion; and
• The purchase of aircraft procurement, aviation services, oil and gas extraction, and imported petrochemical products, totaling US$50.15 billion.

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Companies from both nations are in talks and are anticipated to finalize contracts and agreements totaling around US$36 billion soon. The cumulative value of the economic and trade agreements established between the firms of both countries, set to be implemented starting in 2025, is projected to reach US$90.3 billion. Vietnam’s Ministry of Industry and Trade reports that these collaborations will generate hundreds of thousands of jobs for workers in both countries.

During the meeting, the US Trade Representative conveyed gratitude for what he viewed as Vietnam’s proactive efforts and clear goodwill in tackling ongoing US concerns.

SpaceX’s Starlink to enter Vietnam market

On March 26, Vietnam’s government announced that it would permit SpaceX to initiate its Starlink satellite internet service on a trial basis within the country.

The government stated that there are no restrictions on foreign ownership of this service, and the trial period will extend until the end of 2030. It remains unclear whether SpaceX has submitted an application for a license to operate its service in Vietnam. According to the statement, the company can offer fixed and mobile service plans across Vietnam, including during flights. However, the government has set a cap of 600,000 subscribers for the trial period statement.

Also read: Elon Musk’s SpaceX and Suppliers Bet Big on Vietnam

US firms demonstrate commitments to Vietnam’s market

Amid concerns that Vietnam may be affected by US tariffs due to its trade surplus with the US, a delegation of 64 US companies made a three-day visit to the Southeast Asian nation from March 18 to 20. This visit has underscored the growing interest of US businesses in Vietnam’s market, as well as the local government’s prompt actions to address trade-related issues.

During talks with Vietnam’s leaders, USABC President and CEO Ted Osius acknowledged the challenges posed by global trade uncertainties, including tariff risks, while emphasizing the US. business community’s commitment to enhancing trade and investment in Vietnam.

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Arriving just before the Health & Life Sciences Industry Mission from March 20 to 21, this visit represents a significant strengthening of the partnership between the two countries, now over a year into a comprehensive strategic alliance. Notable companies in the delegation include Apple, Intel, Coca-Cola, Nike, Boeing, Amazon, Exxon Mobil, JPMorgan, Visa, and Meta. These firms seek to explore new opportunities across a wide range of sectors, such as information technology, financial services, logistics, manufacturing, energy, aerospace and defense, healthcare, consumer products, food, and agriculture.

Opportunities for US-Vietnam economic cooperation amidst tariff risks

Although US tariffs might pose significant risks to global trade, including that of Vietnam, they also present an opportunity for businesses from both countries to strengthen their connections, as both sides strive for the common goal of achieving trade balance. Through recent discussions between the two sides, certain sectors have emerged as the most promising for future collaborations.

Energy

Pacifico Energy Group has outlined its investment plans in Vietnam, emphasizing the potential for offshore wind power development. They expressed a commitment to improving energy security through collaboration with Vietnam. A representative highlighted the Vietnamese government’s positive steps in fostering a welcoming business environment and eliminating barriers to investment, which boosts imports of US goods.

According to the media, while Vietnam has not yet imported LNG from the US, it is in discussions with American suppliers for future LNG power plants. The first two of these plants are expected to begin commercial power generation by June of this year.

Technology and Innovation

The Meta Group has publicly announced its intentions to engage in a long-term investment in Vietnam aimed at expanding its virtual world services, with an anticipated creation of 1,000 jobs within the high-tech sector. Furthermore, Meta seeks to collaborate with various partners to establish a comprehensive database for artificial intelligence models and big data, in addition to developing AI tools tailored to the local Vietnamese needs.

Since 2017, Meta has been collaborating with Hanoi National University to enhance digital skills training and plans to introduce an artificial intelligence program targeting students.

Education

The US Association to Advance Collegiate Schools of Business (AACSB International) has expressed interest in enhancing Vietnam’s position through human resource development and education. AACSB International aims to collaborate on improving business education and quality to align with global standards, thereby contributing to Vietnam’s competitiveness.

Tourism

Marriott International has demonstrated its support for Vietnam’s tourism sector by elevating the country to its 228th Marriott Bonvoy program member. Currently, they manage 26 hotels in Vietnam, with an additional 50 in development.

Agriculture

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Bayer, a prominent multinational corporation in the crop science sector, has made a commitment to sustainable agricultural practices in Vietnam. This would be achieved through innovations and the development of capacities for local farmers.

The company aims to launch programs that promote sustainable agriculture, thereby enhancing crop yields and protecting the environment. Furthermore, Bayer will collaborate with Vietnamese government agencies to enhance food security and promote agricultural exports.

Takeaways

Vietnam is actively working to address its significant trade surplus with the US by adopting measures aimed at achieving a balanced trade relationship and strengthening economic ties. This strategic approach is crucial in light of potential US tariffs and reflects Vietnam’s commitment to fostering a more equitable partnership.

Nevertheless, these efforts are likely to enhance collaboration between businesses in both nations while demonstrating Vietnam’s goodwill toward the US government. Given Vietnam’s significant involvement in global trade, businesses and investors should diligently monitor forthcoming developments to strategically prepare for potential repercussions from the anticipated US tariffs and corresponding tariffs from other nations.

To explore how tariffs affect Vietnamese exports in detail, please refer to: Impact of Tariffs by President Trump on Vietnamese Exports

This article was originally published March 28, 2025. It was last updated April 28, 2025.

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