Since the United States and Vietnam normalized relations in 1995, their partnership has gone from strength to strength. Across five presidential administrations, the two countries steadily deepened economic and commercial cooperation, became important maritime partners, and fostered connections between the American and Vietnamese people. Washington spent hundreds of millions of dollars helping Vietnam overcome the legacies of war, and by 2017, an incredible 84 percent of Vietnamese citizens viewed the United States favorably. In 2023, U.S. President Joe Biden traveled to Hanoi for a historic elevation of the relationship, now termed a comprehensive strategic partnership.
Coming on the heels of this 30-year journey, U.S. President Donald Trump’s April 2 decision to impose a stunning 46 percent tariff on Vietnam appeared to represent a significant reversal of fortunes for the two countries’ relationship. Trump’s July 2 announcement that Vietnam would eliminate all tariffs on U.S. goods, yet permanently face a 20 percent tariff itself, as well as a 40 percent tariff on transshipped goods, raised further questions about the future of U.S.-Vietnam ties. Though Vietnam had clearly not agreed to those terms, it decided to bite the bullet and welcome the supposed deal.
Since the United States and Vietnam normalized relations in 1995, their partnership has gone from strength to strength. Across five presidential administrations, the two countries steadily deepened economic and commercial cooperation, became important maritime partners, and fostered connections between the American and Vietnamese people. Washington spent hundreds of millions of dollars helping Vietnam overcome the legacies of war, and by 2017, an incredible 84 percent of Vietnamese citizens viewed the United States favorably. In 2023, U.S. President Joe Biden traveled to Hanoi for a historic elevation of the relationship, now termed a comprehensive strategic partnership.
Coming on the heels of this 30-year journey, U.S. President Donald Trump’s April 2 decision to impose a stunning 46 percent tariff on Vietnam appeared to represent a significant reversal of fortunes for the two countries’ relationship. Trump’s July 2 announcement that Vietnam would eliminate all tariffs on U.S. goods, yet permanently face a 20 percent tariff itself, as well as a 40 percent tariff on transshipped goods, raised further questions about the future of U.S.-Vietnam ties. Though Vietnam had clearly not agreed to those terms, it decided to bite the bullet and welcome the supposed deal.
Vietnam has an exceptional talent for managing its wayward friends. It will go to great lengths to preserve its many partnerships and mitigate the vulnerabilities that grow from overdependence on any one power—including in the latest trade negotiations, in which Vietnam decided to prioritize its overall relationship with the United States and its president, even though doing so required significant concessions. But though Vietnam’s decision can be seen as part of a broader, intentional strategy, what the United States gets out of this deal is much less clear. Trump’s tariffs will increase both countries’ dependence on China, forfeit Vietnam’s cooperation on urgent strategic priorities, and weaken any U.S. claim to global leadership.
Vietnam is no stranger to complicated partnerships. It survived a thousand years of Chinese colonization and more recently fought China to a stalemate in a 1979 border war. Yet China is Vietnam’s largest trading partner, and the Vietnamese Communist Party has vigorously emulated its Chinese counterpart’s political and economic path—doubling down on Leninist one-party governance while embracing economic liberalization that unleashed near-miraculous rates of export-driven growth. Vietnamese strategists have learned to hold multiple truths at one time. To paraphrase an oft-whispered catechism: “Vietnam must always resist China and befriend China.”
It is not only China that has proved an imperfect friend. Russia has been Vietnam’s long-time security partner, yet Putin supports China over Vietnam on vital questions of sovereignty and law in the South China Sea. Of Vietnam’s Southeast Asian neighbors, Thailand and the Philippines helped the United States bomb Vietnam back to the stone age. Cambodia under the Khmer Rouge massacred Vietnamese civilians. Notwithstanding its successful reconciliation efforts, the United States killed more than 3 million Vietnamese.
While a less strategically minded country might cope with its partners’ periodic betrayals by turning inward, Vietnam has instead embraced a zealous internationalism designed to boost trade and persuade great powers of all ideological stripes that Vietnam’s autonomy and prosperity are critical to these powers’ preferred world orders. Vietnam has invested tremendous energy in deepening and routinizing cooperation with a diverse array of partners, and this strategy has yielded impressive results: The leaders of Brazil, China, the European Union, Japan, North and South Korea, Russia, the United States, and many more nations have competed for Vietnam’s affections.
Vietnam’s foreign policy has become a balancing act of Bismarckian scale. To deter Chinese aggression against Vietnam’s outposts in the South China Sea, Vietnam expands its maritime partnership with the United States. To secure U.S. funding and political support for this partnership, Vietnam releases the political prisoners who garner the most attention on Capitol Hill, and to hedge against any perceived risk to regime security, Vietnam deepens cooperation with the Chinese Communist Party on internal security and social control. Vietnamese officials advocated fervently for Biden to visit Hanoi in 2023—and then quickly restored balance (and forestalled Chinese retaliation) by hosting Chinese President Xi Jinping and, controversially, Russian President Vladimir Putin.
To protect and strengthen its many partnerships, Vietnam is often prepared to offer significant tactical concessions. In negotiating the Trans-Pacific Partnership (TPP), an ambitious multilateral trade agreement, Vietnam accepted U.S. demands to legalize independent trade unions—a major concession for a one-party communist state—in order to expand trade, lessen Vietnam’s dependence on China, and institutionalize U.S. economic leadership in Southeast Asia. (In 2017, Trump withdrew the United States from the TPP, and these labor commitments became moot.) In 2020, the United States opened an investigation into allegations of Vietnamese currency manipulation. To avoid punitive tariffs, Vietnam soon announced currency reforms and offered the U.S. Treasury Department unprecedented transparency into Vietnam’s foreign exchange practices.
During Xi’s 2023 trip to Hanoi, Vietnam offered obsequious support for the Chinese leader’s prized Global Security Initiative, despite Vietnam’s strong distrust of China’s military intentions. This followed big upgrades to Vietnam’s relationship with the United States, and Vietnamese officials appeared to believe that diplomatic concessions would persuade Beijing to shelve any plans for concrete retaliation. It worked, but also highlighted a complication in Vietnam’s international strategy—a deal with one country can force Vietnam to strike worse deals with others for the sake of balance.
Now that a deal has been announced between the United States and Vietnam, both sides are scrambling to finalize an agreement. Trump already said Vietnam would face a tariff on transshipped goods, but what constitutes transshipment will be fiercely negotiated. State press has suggested that Vietnam will also try to leverage its concessions on tariffs to secure access to high-end U.S. technology as well as market economy status, which would insulate the country from harsh anti-dumping measures. These measures are important to Vietnam in part because they would allow the country to forge new connections with U.S. industry, deepening interdependence and engagement even as Trump’s tariffs cut in the other direction. But ultimately, with or without these wins, Vietnam will take the deal. Vietnam cannot afford to lose the U.S. market or the broader partnership, and it will find a way to live with Trump’s America. For the United States, the logic of this deal is less clear.
The tariffs will weaken the Vietnamese and U.S. economies alike and increase both countries’ dependence on China. While some Vietnamese exports may still be competitive with a 20 percent tariff, it is unclear how broadly the 40 percent rate will be applied. U.S. Commerce Secretary Howard Lutnick’s insistence in recent congressional testimony that Vietnam is “just a pathway of China to us” suggests the administration may view products that are manufactured in Vietnam but use Chinese inputs or components as transshipment meriting the 40 percent levy. That would leave Vietnamese exports facing a significantly higher tariff than products that are actually made in China, which currently faces an average effective tariff rate of 27.9 percent. It is unclear why Chinese products shipped from Vietnam should be taxed at a higher rate than Chinese products shipped from China. Taken together, this tariff structure would reverse many U.S. companies’ quiet moves to shift manufacturing from China to Vietnam, reintroducing supply chain vulnerabilities that China can wield in its own trade negotiations with the United States.
Additionally, now that Vietnam has accepted what are widely seen as anti-China transshipment measures, it will strive to restore balance in its foreign partnerships by offering commensurate concessions to Beijing. China’s Commerce Ministry has already threatened “countermeasures” against Vietnam, and Hanoi will work hard to forestall them. More than 27 percent of Vietnamese exports may go to the United States, but China also holds significant leverage as Vietnam’s largest overall trading partner. However Hanoi’s rebalancing unfolds, it will surely run counter to Washington’s interests.
Furthermore, the opportunity cost of this deal is substantial. With the U.S. government prepared to make American families spend more on electronics, furniture, and clothes to improve its negotiating position with Vietnam, significant economic and security achievements were within reach. For example, Vietnam’s prohibition on independent trade unions is not only a labor rights concern but also an unfair trade practice that disadvantages U.S. manufacturers. The United States could have revisited and strengthened its 2016 demands regarding freedom of association and collective bargaining rights. The administration could have also pressed Vietnam to buy more U.S. military equipment, collaborate with the Quad and other U.S.-led regional organizations, or quietly engage with Taiwanese counterparts. Spending so much leverage and goodwill on tariffs alone will complicate U.S. efforts to pursue these other goals.
The deal also weakens the United States’ claim to global leadership. Despite Vietnam’s rapid economic growth, its GDP per capita has only climbed to $4,717, barely beating out Jordan and Namibia for the 140th-highest per capita GDP of economies globally. Punching down at poor countries is not the stuff from which international standing is made.
Through punishing tariffs, Trump may succeed in reducing the United States’ trade deficit with Vietnam. By publicly welcoming this approach, Vietnam may succeed in retaining Trump’s goodwill and some access to the U.S. market. But when the strategic and economic costs of this approach are considered, it is hard to see the deal as anything but a loss.
