Trump tariffs live updates: Trump announces Vietnam deal as US-China trade tensions ease

Key Points

Research suggests the Vietnam trade deal involves a 20% tariff on Vietnamese exports to the US and a 40% tariff on transshipped goods, likely targeting China.
It seems likely that recent US-China agreements, such as the rare earth deal, have contributed to easing trade tensions, though challenges remain.
The evidence leans toward the Vietnam deal being part of a broader US strategy to diversify trade, potentially affecting US-China relations indirectly.

Vietnam Trade Deal

On July 2, 2025, President Donald Trump announced a preliminary trade deal with Vietnam, imposing a 20% tariff on Vietnamese exports to the US and a 40% tariff on transshipped goods, aimed at preventing Chinese manufacturers from bypassing US tariffs. Vietnam will eliminate tariffs on US goods, opening its market to American products like large-engine cars. This deal replaces a previously planned 46% tariff, set to take effect on July 9, 2025, and is seen as a framework rather than a comprehensive pact.

US-China Trade Tensions

Recent developments indicate a partial easing of US-China trade tensions, particularly with a June 27, 2025, agreement allowing China to export rare earth minerals to the US, addressing a critical supply issue. The US has reduced tariffs on Chinese imports to 55% from 145%, but high tariffs and ongoing restrictions suggest tensions persist. The Vietnam deal, while not directly easing US-China tensions, is part of a strategy to reduce reliance on Chinese manufacturing, potentially complicating relations.

Supporting Sources

Comprehensive Analysis of Trump’s Tariffs and Trade Deals as of July 3, 2025

This section provides a detailed examination of President Donald Trump’s recent trade announcements, focusing on the Vietnam deal and its implications within the context of US-China trade relations. The analysis is grounded in recent news reports, economic data, and official statements, ensuring a thorough understanding of the developments as of 02:01 AM PDT on Thursday, July 3, 2025.

Background and Context

The US trade policy under Trump has been characterised by a strategy of imposing tariffs and negotiating bilateral trade deals, often under the “90 in 90” initiative, aiming to sign 90 trade agreements in 90 days. This approach has been particularly focused on addressing trade imbalances, reducing reliance on Chinese manufacturing, and enforcing trade rules. The Vietnam deal, announced on July 2, 2025, and recent US-China agreements, such as the rare earth deal confirmed on June 27, 2025, are pivotal developments in this landscape.

Recent economic trends, including shifting manufacturing bases and ongoing trade disputes, have shaped these negotiations. The US has maintained high tariffs on Chinese goods, reaching 145% at one point, now reduced to 55%, while Vietnam has emerged as a significant alternative manufacturing hub due to lower tariff rates and proximity to China.

Details of the Vietnam Trade Deal

On July 2, 2025, Trump announced a preliminary trade pact with Vietnam, which includes the following key provisions:

A 20% tariff on all imports from Vietnam to the US, lower than the previously planned 46% tariff, which was set to snap back on July 9, 2025, following a 90-day pause from April.
A 40% tariff on goods deemed transshipped through Vietnam, aimed at preventing Chinese manufacturers from using Vietnam as a conduit to bypass US tariffs on China.
Vietnam agreed to open its market to American goods without tariffs, including preferential access for large-engine cars, as noted in Reuters reports.
The deal is described as a framework rather than a finalised pact, with unclear specifics on product categories for the 20% tariff and implementation details for transhipment provisions.

Economic data highlights Vietnam’s growing role in US trade:

In 2024, the US imported $136.6 billion from Vietnam, up from $56 billion in 2019, making Vietnam the sixth-largest source of US imports, according to US Commerce Department data.
The US trade deficit with Vietnam was $123 billion in 2024, the third-largest, compared to $56 billion in 2019, the fifth-largest.
Top imports include computers, electronics, apparel, accessories, and furniture, reflecting a shift from Chinese manufacturing due to higher tariffs on China.

The deal is expected to impact Vietnam’s economy, with Bloomberg estimating a potential loss of 25% of its exports to the US in the medium term, risking over 2% of its annual economic output. Shares of companies reliant on Vietnam, such as Nike, Lululemon, Columbia Sportswear, and VF Corporation, saw gains post-announcement, with Nike up 4.2%, Columbia Sportswear up 1.3%, Lululemon up 0.7%, and VF Corporation up 1.5% by around 3 p.m. ET on July 2, 2025, as reported by CNN.

Implications for US-China Trade Relations

Recent developments suggest a partial easing of US-China trade tensions, primarily driven by the rare earth deal confirmed on June 27, 2025:

China agreed to approve export applications of rare earth minerals to the US, addressing a critical supply issue given China’s control of around 90% of global rare earth processing, according to the International Energy Agency.
The US will cancel restrictive measures against China once the rare earths are delivered, with additional commitments including China supplying magnets and necessary rare earths upfront and the US allowing Chinese college students to attend American universities.
Previous agreements include a Geneva deal in May 2025 to de-escalate tariffs and an understanding reached in London earlier in June 2025, pending approval by leaders, as reported by CNN.
However, challenges remain, as China’s dual-use export restrictions may still prohibit shipments to US military suppliers, affecting defence contractors, and US tariffs on Chinese imports remain high at 55%, down from a peak of 145%.

The Vietnam deal, while not directly aimed at easing US-China tensions, has implications for the relationship:

The 40% tariff on transshipped goods is likely targeting China’s use of Vietnam to skirt US import duties, as noted by Bloomberg, potentially provoking retaliatory steps from China, given Vietnam’s role as China’s largest trading partner and key source of inputs.
Chinese investment in Vietnam has grown rapidly, but South Korean companies like LG and Samsung remain the biggest foreign investors, with China maintaining deep economic ties, including agricultural exports, as reported by The New York Times.
During Xi Jinping’s April 2025 visit to Vietnam, China signed cooperation agreements, including railway integration, and warned against “unilateral bullying,” seen as a caution against siding with the US, indicating ongoing strategic competition.

Methodological Considerations and Supporting Data

The analysis is derived from recent news reports from reputable sources, including Reuters, Bloomberg, The New York Times, CNN, and Newsweek, which provide economist forecasts, official statements, and economic data. For instance, US Census Bureau data was used for trade deficit figures, and market reactions were tracked through stock price movements reported by CNN. The forecasts and implications are based on these sources, acknowledging the complexity of trade negotiations and potential for deviation from expected outcomes.

Potential Influences and Uncertainties

Several factors may influence the outcomes of these deals:

Retaliation Risks: China’s potential retaliatory measures against Vietnam could impact Vietnam’s economy and, indirectly, US trade interests, given Vietnam’s role as an alternative manufacturing hub.
Implementation Challenges: The Vietnam deal’s framework nature and unclear details on tariffs and transhipment provisions may lead to disputes or delays in implementation.
Global Market Volatility: Both deals, part of Trump’s tariff-driven strategy, have caused uncertainty for US consumers, manufacturers, and businesses, with subdued market reactions reflecting concerns over sustainability, as noted by Newsweek.

Comparative Analysis

The following table summarizes the key aspects of the Vietnam and US-China deals:

Aspect	Vietnam Deal (July 2, 2025)	US-China Deal (June 27, 2025)
Tariff on Exports	20% on Vietnamese exports, 40% on transshipped goods	US maintains 55% tariffs on Chinese goods
Market Access	Vietnam eliminates tariffs on US goods	China allows rare earth exports to US
Strategic Focus	s	a Address critical supply chain issues
Economic Impact	Potential 25% loss in Vietnam’s US exports	Eases supply constraints, ongoing tariff barriers
Political Context	Part of “90 in 90” initiative	Follows Geneva and London agreements

Conclusion

The Vietnam trade deal announced by Trump on July 2, 2025, involves a 20% tariff on Vietnamese exports and a 40% tariff on transshipped goods, likely targeting China, and opens Vietnam’s market to US goods without tariffs. While not directly easing US-China trade tensions, it is part of a broader strategy to diversify trade and reduce dependence on China. Recent US-China agreements, particularly the rare earth deal, have contributed to a partial easing of tensions, though challenges like high tariffs and export restrictions persist. The analysis reflects the complexity of these negotiations, acknowledging potential economic and geopolitical implications for all parties involved.

Supporting Sources:

Newsweek: Trump Announces Third Trade Deal Ahead of ’90 in 90′ Deadline