Vietnam on Thursday hailed as a breakthrough a long-awaited trade deal with the United States and said its negotiators were coordinating with U.S. counterparts to formalize terms with Washington, D.C.
Details on the deal announced by President Donald Trump were scant, but Washington would place a lower-than-promised 20% tariff on many Vietnamese exports and a 40% levy on transshipments through Vietnam from third countries.
The agreement is the culmination of a months-long effort and a raft of concessions from regional manufacturing powerhouse Vietnam to renegotiate a reduction in U.S. tariffs that were initially set at 46%, triggering alarm in the Communist Party-ruled nation.
The announcement followed a phone conversation between Trump and Vietnamese President To Lam on Wednesday.
"This is an important negotiation result, creating hope and expectations for businesses," Vietnam's Finance Minister Nguyen Van Thang told a cabinet meeting on Thursday, adding Vietnam would continue to boost exports and expand "harmonious and sustainable" trade relations with other countries.
Foreign ministry spokesperson Pham Thu Hang said negotiators were finalizing the terms with U.S. counterparts.
"The Party's General Secretary To Lam highly values President Donald Trump's attention to Vietnam," Hang added.
The United States is Vietnam's largest export market and the two countries' growing economic, diplomatic and military ties are a hedge against Washington's biggest strategic rival, China. Following U.S. threats of the punitive tariffs, Vietnam has been cracking down on some imports from China, which Washington has said have for long been illegally rerouted through Vietnam to the United States to avoid higher duties, with no or insufficient value added to justify "Made in Vietnam" labels.
Details on the deal between the two countries were yet to be shared, with no clarity on Thursday on rules of origin and what would constitute locally manufactured products and what would be considered transhipment. There was mixed reaction from investors and analysts about a vague deal described by the government only as a joint statement for a "reciprocal, fair and balanced" trade arrangement.
"We need to wait for more details," said Can Van Luc, a government adviser and an economist at the state-run Bank for Investment and Development of Vietnam.
Yuanta Securities Vietnam said the 40% tariff on transshipments raises questions about definition and regulations for such goods, adding that it was one of the measures aiming to reduce the heavy reliance on Chinese products.
"The competitive advantage of Vietnamese goods compared to Chinese and regional peers will depend on the final tariff structure and rates applied to other countries," it said in a statement.