New US-Vietnam Trade Deal Raises Questions About Tariff Effectiveness

USD: Another Trade Deal, More Economic Doubts

The US government has announced its third major trade deal in recent months, following similar agreements with the UK and China. This time, the focus is on Vietnam, a key Asian exporter to the United States.

What’s in the Deal?

The newly signed agreement includes:

• A 20% import duty on Vietnamese goods, reduced from the originally proposed 46%.
• A 40% tariff on transshipped goods, potentially targeting Chinese rerouted exports.
• In return, Vietnam will remove all import duties on US products.

At first glance, this seems like a win for the US, but economic experts are voicing strong concerns.

Economic Viability Under Scrutiny

Analysts are questioning the long-term impact of import duties, particularly on products the US cannot realistically substitute or produce locally. For example:

• Textiles and consumer goods from Vietnam are hard to replace domestically in the short term.
• Coffee imports present an even tougher challenge, given the lack of suitable US growing regions (excluding Hawaii).

These realities cast doubt on whether tariffs are truly effective tools for economic resilience or simply political signaling.

Dollar Remains Uninspired

Despite the announcement, the US Dollar failed to gain. Market sentiment reflects skepticism that such deals will provide the economic uplift the administration hopes for, especially since Vietnam lacks the purchasing power to significantly increase imports of American goods.

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