On July 3, 2025, the historic trade agreement reached between the United States and Vietnam has dropped a bombshell on the global trade landscape. In exchange for Vietnam's comprehensive opening of its domestic market, the basic tariff on Vietnamese goods exported to the U.S. is locked in at 20%, while punitive tariffs of up to 40% are imposed on goods involved in "transshipment trade," fundamentally altering the Southeast Asian supply chain pattern established since the U.S.-China trade war. This agreement not only marks a significant breakthrough in the Trump administration's "reciprocal tariff" policy but also signals a deep restructuring of the global industrial division of labor. This article will comprehensively analyze the economic background of this agreement, its core terms, its disruptive impact on the transshipment trade model, and its profound significance for global supply chain restructuring, U.S.-China competition, and the development strategies of emerging economies.
In early April 2025, the Trump administration suddenly announced the implementation of a "reciprocal tariff" policy for all trading partners, with the tariff rate on Vietnamese goods exported to the U.S. set at an astonishing 46%, second only to the rate on Chinese goods. This figure was a fatal blow to the Vietnamese economy—Vietnam's exports to the U.S. reached $136.6 billion in 2024, accounting for nearly 30% of its GDP, while U.S. exports to Vietnam were only $13.1 billion, resulting in a trade deficit of over $123 billion. If the 46% tariff were to take effect, Vietnam's pillar industries such as textiles and electronics would face catastrophic consequences, which is why the Vietnamese stock market plummeted 6% on the day the news was announced, marking the largest single-day drop since the outbreak of the Russia-Ukraine conflict in 2023.
In the face of this "economic nuclear bomb," the Vietnamese government quickly launched self-rescue actions: urgently signing a $3 billion import agreement for U.S. agricultural products, rapidly approving the purchase of Boeing aircraft, establishing a "National Anti-Smuggling Guidance Committee," and formulating a "Supply Chain Traceability System" plan. At the same time, American giants relying on Vietnamese manufacturing, such as Nike and Apple, also pressured the White House, ultimately prompting the U.S. side to lower the tariff rate to 10% just hours after it took effect and set a 90-day negotiation window.
After three months of intensive negotiations, the two sides finally reached this agreement, referred to by outsiders as the "Pact of Surrender." According to the agreement, Vietnamese goods exported to the U.S. will be categorized into three types with a tiered tariff mechanism: a uniform 20% import tariff on locally produced Vietnamese products; a 40% punitive tariff on transshipment trade of goods from third countries such as China; and U.S. products exported to Vietnam will enjoy zero tariffs, especially benefiting automobiles, agricultural products, and energy products.
Notably, the agreement also includes two key mechanisms: first, the U.S. is allowed to send personnel to inspect production lines in Vietnamese factories to ensure no Chinese components are mixed in; second, goods must meet the requirement of a change in the first six digits of the HS code or a local value-added rate of over 30% to be recognized as "Made in Vietnam." These terms effectively grant the U.S. deep regulatory authority over Vietnam's manufacturing sector, with Vietnam ceding part of its economic sovereignty in exchange for a buffer against the tariff cliff.
The most lethal clause in the agreement is the imposition of a 40% tariff on transshipment trade, which directly targets the "Vietnam transshipment" business model that has emerged since the U.S.-China trade war. U.S. Secretary of Commerce Howard Lutnick has publicly accused, "Vietnam is merely a conduit for Chinese goods entering the U.S." Data shows that Vietnam imports about $90 billion worth of goods from China each year, of which 16% are simply processed and labeled as "Made in Vietnam" for export to the U.S. This model has made Vietnam "one of the biggest beneficiaries" of the U.S.-China trade war, with its trade surplus with the U.S. soaring to third globally in 2024.
The new agreement will completely block three major gray pathways: "simple assembly" that only completes the final process, "label transshipment" that directly changes the country of origin label, and "supply chain nesting" that artificially inflates the local value-added ratio through shell companies. As a furniture factory owner in Dongguan expressed concern, "Our factory in Vietnam only does painting and packaging; under the new rules, we won't be able to obtain the certificate of origin at all." More severely, U.S. Customs is establishing a "high-risk enterprise list" to conduct traceability audits on steel, aluminum products, and others, with violators facing criminal charges.
This shift poses a survival crisis for Chinese enterprises reliant on transshipment trade. Analysis indicates that about 3,000 Chinese companies engaged solely in simple processing are under pressure to withdraw from Vietnam. To meet the 30% local value-added rate, they will need to rebuild their supply chains, leading to a cost increase of over 20%. Moreover, acts of origin fraud will be traced, and related enterprises and individuals may face criminal penalties under U.S. tariff laws, potentially resulting in a lifetime ban on trade with the U.S. The golden era of Vietnam's transshipment trade has abruptly ended. This change not only affects Chinese and Vietnamese enterprises but will also reshape the entire industrial ecology of Southeast Asia. As the U.S. may extend similar scrutiny mechanisms to countries like Thailand and Malaysia, the "supply chain domino effect" within the region is becoming evident. The shift of manufacturing is accelerating towards regions like India and Mexico, which are further from U.S. regulatory oversight, marking the entry of the "China +1" strategy into its 2.0 phase.
The ripple effects of the U.S.-Vietnam agreement are spreading throughout the global supply chain, creating a new batch of beneficiaries while forcing many participants to face difficult transformations. From the perspective of the industrial chain, this agreement is reshaping the international division of labor in multiple industries. The electronics industry is experiencing the most severe reshuffle. Apple has planned to withdraw 65% of its AirPods production capacity from Vietnam to India and Mexico. Samsung has adopted a more forward-looking strategy, having already moved 30% of its mobile phone production capacity to India before the agreement was reached. Foxconn's factory in Mexico is working around the clock to take on orders transferred from Vietnam. These trends indicate that multinational electronics giants are implementing a "dual distancing" strategy—avoiding China to evade U.S. tariffs while also distancing from Vietnam to avoid origin scrutiny, ultimately forming a more decentralized global production network.
The textile and apparel industry, on the other hand, faces a cost transmission dilemma. The 20% tariff has caused the price of men's sweaters and other products in the U.S. to rise by about 8%, significantly increasing the risk of order loss. The American Chamber of Commerce in Vietnam has warned that the new tariffs will ultimately be borne by U.S. consumers, with taxed products like sneakers facing a second price increase. This pressure is prompting brand owners to accelerate the transfer of production capacity to countries like Cambodia and Bangladesh, while also encouraging local Vietnamese textile enterprises to extend into upstream material production to increase the local value-added ratio.
The impact on the agricultural sector is also significant. As a condition of the agreement, Vietnam has fully opened its agricultural market, allowing U.S. beef, corn, and other products to enter Vietnam at zero tariffs. This poses a "devastating blow" to Vietnam's local agriculture but opens an important new market for American farmers. Notably, the choice of Vietnamese cashew trader Chen Wenxiong is quite representative: "I would rather sell to China for 5% less profit than risk having my goods held by U.S. Customs for three months," reflecting the subtle shift occurring in Southeast Asian agricultural trade.
In this supply chain reconstruction, Chinese and American enterprises have adopted vastly different response strategies. Chinese companies like CATL have chosen to sign a 120GWh battery supply agreement with Vietnam's VinFast, directly integrating into the U.S. Tesla supply chain to evade tariffs. Meanwhile, General Motors in the U.S. has protested that if zero tariffs for Vietnam are implemented, its Cadillac produced in China will face price pressure from vehicles assembled in Vietnam. This complex game of "you have me, I have you" highlights the reality of the deep intertwining of global industrial chains.