US-Vietnam Framework for Trade Agreement: Key Terms and Expectations

On October 26, Vietnamese Prime Minister Pham Minh Chinh and US President Donald Trump announced a Joint Statement on the US-Vietnam Framework for an Agreement on Reciprocal, Fair, and Balanced Trade. The framework not only sketches a plan for tariff exemptions but also expands to initiate deeper integration across supply chains, trade, and investment between the two countries.

The latest US-Vietnam joint statement might have surprised some people. Yet, this framework is a solid sign of the long-awaited deliverable from multiple trade negotiation rounds between the two countries – an agreement to create balanced trade practices and foster more integrated future cooperation.

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It highlights the main elements of the agreement, with both parties working collaboratively to address shared concerns about non-tariff barriers, agree on digital trade, services, and investment commitments, and participate in discussions on intellectual property, sustainable development, and supply chain resilience.

On the same day, a fact sheet from the US Trade Representative’s Office (USTR) stated that the US and Vietnam will continue negotiating in the coming weeks to finalize their deal. While waiting for the detailed agreement, we outline the main terms of the framework to assess its implications for businesses and investors in both countries, as well as what to expect in the upcoming agreement.

Overview

The joint statement with Vietnam is one of the trade deals President Trump inked during the 47th ASEAN Summit in Kuala Lumpur, Malaysia, held October 26-28.

Besides Vietnam, the US President has signed another joint statement on a framework agreement with Thailand, while simultaneously announcing new reciprocal trade agreements with Cambodia and Malaysia. The two final deals and two framework agreements cover about 68 percent of US two-way trade with the 10 members of the Association of Southeast Asian Nations (ASEAN), amounting to approximately US$475 billion.

According to President Trump, his country remains “a strong partner and friend” to the Southeast Asian countries for “many generations to come,” and is “committed to a free and open and thriving Indo-Pacific”.

Commitments to lower tariffs

The reciprocal tariff rates announced by the US government on July 31, 2025, have been a key focus of US trade policy in recent months. Under this policy, Vietnam’s exports face a 20 percent tariff on several products and a 40 percent duty on transshipments from third countries. 

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While businesses have learned to navigate the fluidity of current US trade policies, the reciprocal tariff rates remain a burden for Vietnam’s exporters, as well as for US importers and consumers.

In a shared effort to lower tariff barriers to bilateral trade, Vietnam has committed to removing tariffs on nearly all American goods, including food and agricultural products, opening up market access for the full spectrum of US exports.

In return, the US will identify products from the list set out in Annex III to Executive Order 14346, which stipulates potential tariff adjustments for aligned partners, to receive a zero percent reciprocal tariff rate.

Although the 20 percent reciprocal tariff will stay in place, the agreement is expected to provide some relief to affected stakeholders. However, product-specific tariffs are still in effect, meaning businesses should continue to monitor trade developments closely.

Erasing non-tariff barriers for US exports

The US and Vietnam have agreed to work together to resolve non-tariff barriers affecting bilateral trade in key sectors. According to the framework, Vietnam will take steps to ease several market access constraints for US exports, including:

• Recognizing vehicles that meet US motor vehicle safety and emissions standards;
• Streamlining import licensing procedures for US medical devices;
• Simplifying regulatory approvals for US pharmaceutical products;
• Fulfilling commitments under international intellectual property treaties; and
• Improving conformity assessment processes.

Both sides have also committed to addressing and preventing barriers to US agricultural exports, ensuring that Vietnam continues to recognize regulatory oversight and certificates issued by US authorities.

Building sustainable supply chains

One of the key clauses in the joint statement is the commitment to combat duty evasion and collaborate on export controls. Accordingly, the two countries will work together to strengthen supply chain resilience, including efforts to address duty evasion and enhance export control cooperation.

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Though only briefly mentioned, the term may signal stricter US oversight of transshipment activities, as reflected in the official agreement. This possibility appears particularly likely when viewed in light of the new US agreements with Cambodia and Malaysia.

Both Phnom Penh and Kuala Lumpur have committed to implementing measures to prevent transshipment and other practices intended to avoid US duties. They have also accepted the potential risk of ending the agreement if they establish new bilateral or preferential trade agreements with countries considered a threat to vital US interests. Additionally, these agreements require Malaysia and Cambodia to collaborate with the US against specific “third countries” in areas such as investment screening and export controls.

From another perspective, American news media like Politico have argued that the language in the US-Vietnam joint statement was “softer” than that in the agreements with Malaysia and Cambodia, possibly reflecting Vietnam’s concerns about maintaining balanced relationships with all its trade partners.

See also: US Transshipment Scrutiny: Origin Compliance for Vietnam-Based Firms

Strengthening bilateral commercial ties

The US and Vietnam have acknowledged a series of recent commercial agreements between companies from both countries across key sectors, such as agriculture, aerospace, and energy.

Vietnam Airlines has signed a deal to purchase 50 Boeing aircraft, valued at over US$8 billion. In addition, Vietnamese enterprises have entered into 20 memorandums of understanding with US partners to buy agricultural commodities valued at an estimated US$2.9 billion.

Expanding cooperation in digital trade and investment

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The US and Vietnam are set to finalize new commitments covering digital trade, services, and investment. These efforts aim to foster a more transparent and predictable business environment, particularly in cross-border data flows, e-commerce, and financial services, thereby creating new opportunities for US and Vietnamese technology firms, digital service providers, and investors.

Both sides have also agreed to deepen engagement on a wide range of regulatory and structural issues, including intellectual property protection, labor and environmental standards, customs and trade facilitation, and good regulatory practices. In addition, cooperation will extend to addressing market distortions linked to state-owned enterprises.

For businesses, these initiatives signal a move toward greater regulatory alignment, improved market access, and a more level playing field across sectors ranging from manufacturing to digital services.

Takeaway

The recently announced US-Vietnam trade agreement framework presents Vietnam’s commitments to improve market access for US exports, while opening up new opportunities in digital trade and investment for both markets. The agreement seeks to address non-tariff barriers, streamline import processes for medical devices and pharmaceuticals, and enhance cooperation on intellectual property and supply chain resilience.

Businesses should closely monitor developments as the final agreement is negotiated, particularly regarding tariff adjustments and regulatory changes, to capitalize on these new trade dynamics.

See also: How Vietnam’s Supporting Industries Are Responding to US Tariffs

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