【By Guoanchazhe Wang Qi Qian】The United States recently announced a trade agreement with Vietnam, which will impose a 20% tariff on Vietnamese goods.

Hong Kong's South China Morning Post published an article on July 4 stating that the 20% tax rate is lower than the 46% initially threatened by the Trump administration, which has relieved Vietnamese export companies. However, this agreement contains hidden implications. US President Trump claimed that goods "transshipped through Vietnam" would face a 40% tax rate.

The New York Times of the United States also reported on the same day that it remains unclear how the "transshipment" clause will be implemented, but the move aims to isolate China.

However, multiple analysts pointed out that due to the deep integration of Southeast Asian countries' supply chains with China and their lack of established local industrial ecosystems, this clause may have profound impacts on Vietnam and affect the entire region. Some experts said that for countries like Vietnam, complying with U.S. demands carries geopolitical risks, as the U.S. move could push some countries deeply integrated with the Chinese economy into China's embrace.

Experts: The Trump Administration Is Exaggerating

The term "transshipment" usually refers to the practice of exporters transferring goods through a third country to avoid tariffs.

In recent years, many Chinese enterprises have extended their production lines to Vietnam, which is a legitimate flow in the supply chain. However, the Trump administration does not see it that way. The report mentions that since the beginning of this year, after Trump took office and launched a global tariff war, the U.S. has become increasingly concerned about "transshipment." U.S. government officials have falsely accused Chinese goods of being exported to Southeast Asian countries and other third countries to enter the U.S. at lower tariffs.

In reality, while U.S. officials make such claims, they have almost no specific quantitative evidence to support them. At the same time, some analysts pointed out that the U.S. is exaggerating and inflating the so-called transshipment issue. Mitsubishi UFJ Bank stated in a report that if enforcement targets only the most obvious cases of trade diversion, the impact of the transshipment tariff might be limited.

Currently, neither the U.S. nor Vietnam has released the full text of the agreement. Politico, a U.S. political news website, said that the joint statement draft it saw indicates that after further negotiations, the U.S. may reduce tariffs on certain Vietnamese goods, including technology products, shoes, agricultural products, and consumer goods such as toys. Bloomberg said that for high-value-added products made entirely locally in Vietnam, the tariff might be only 10%.

As an exchange, Vietnam agreed to reduce its tariffs on the U.S. to zero and resolve non-tariff barriers such as intellectual property infringement, while providing preferential market access for U.S. agricultural products (poultry, pork, beef) and specific industrial goods. The draft statement also confirmed that Vietnam will finalize the long-delayed $8 billion purchase of 50 Boeing aircraft and sign a $2.9 billion memorandum of understanding for U.S. agricultural imports.

But on the day of the agreement signing (the 2nd), Trump posted that goods deemed "transshipped through Vietnam" would face a 40% tariff.

Trump's post screenshot

Is the U.S. Trying to Isolate China?

The South China Morning Post said that Trump's threat of a 40% tariff on "transshipped" goods has sparked debate, because it shows the U.S.'s seriousness about the issue and stems from the uncertainty of its own policies. Currently, the core concern of businesses and policymakers is how the U.S.-Vietnam agreement will define "transshipment"; whether the 40% tax rate applies only to goods that are purely transshipped through Vietnam or expands its scope?

Vietnam was one of the first countries named by President Trump, who was willing to negotiate on tariff issues. Trump initially announced that he would impose a 46% so-called "reciprocal tariff" on Vietnam, which was later temporarily reduced to 10%, leading to the start of negotiations between the two countries.

On April 22, Vietnamese Prime Minister Pham Minh Chinh urged all departments and industries, especially the negotiation teams, to prepare for all content of the negotiations with the U.S., promote balanced and sustainable development of Vietnam-U.S. trade; not complicate the issue, not affect the international agreements that Vietnam is involved in, not let one market affect others, and take appropriate measures to achieve mutual benefits, harmonious interests, and shared risks.

Data show that Vietnam was the biggest beneficiary of China's tariffs during Trump's first presidential term. Vietnam's trade surplus with the U.S. surged from $38.3 billion in 2017 to $123.5 billion in 2024.

The New York Times pointed out on May that after Trump announced the so-called "reciprocal tariffs," Vietnam faced a serious challenge. Faced with U.S. pressure, Vietnam's position was very awkward. For Vietnam, the challenge was proving that the products it exported to the U.S. were manufactured in Vietnam, not in China.

At the time, Adam Sittkov, Executive Director of the Vietnam-U.S. Chamber of Commerce, said: "Trump's top priority is to get Vietnam to solve the so-called 'transshipment' issue and ensure that some agreements are signed that show Vietnam is taking action."

Deborah Elms, a trade policy director at the Hinrich Foundation, noted: "The U.S. seems to believe that all products from China are automatically transshipped, so it wants to suppress every product from China." She also said: "Asian governments are being asked by the U.S. to redefine their supply chains, but this may take decades to complete. And what's the benefit of doing so? It's unknown."

Roland Rajah, Chief Economist at the Lowy Institute, an Australian think tank, pointed out that the final definition of "transshipment" by the Trump administration will have a significant impact on Vietnam's export capacity. He analyzed, "If the U.S. defines 'transshipment' too broadly, considering any Chinese components in Vietnamese products, regardless of the proportion, there will be much more trouble."

The South China Morning Post cited analysis in its report on July 4, indicating that the U.S. move has deeper intentions, showing the U.S. determination to weaken China's role in regional supply chains. Su Yue, Chief Analyst for China at The Economist Intelligence Unit, said that although the specific criteria for identifying transshipment remain unclear, the U.S. is committed to weakening Vietnam's role as a transit hub for Chinese goods entering the U.S.

At the same time, U.S. media outlets such as The New York Times and The Washington Post analyzed that this clause clearly targets China. The relevant provisions of the U.S.-Vietnam trade agreement highlight one of the core goals of the Trump administration in Asia: curbing trade with China and pushing China out of the supply chain.

A worker ironing clothes in a Vietnamese factory, U.S. media

"The question is, does the world agree with the U.S. doing this?"

"How to define 'transshipment' is crucial," said the South China Morning Post, as the supply chains of Southeast Asian countries like Vietnam are deeply intertwined with China.

This means that the raw materials for products in Southeast Asian countries mainly come from China, and part of the production and assembly is completed locally. On July 3, Nomura Securities analysts warned in a report that if such goods are also identified as "transshipped" under the new agreement, higher tariffs could "open Pandora's box" for the entire region, as Asia "heavily relies on Chinese intermediate goods imports and has not yet established a local industrial ecosystem."

From a fundamental level, the tariffs in the U.S.-Vietnam agreement will directly affect Asian economies, as many countries rely heavily on exports to the U.S. Nomura Securities estimated that if current tariff levels remain, Vietnam's GDP would face a risk of 1.7%, Thailand 0.7%, and South Korea and Malaysia each 0.6%.

Additionally, some analysts believe that the details of the U.S.-Vietnam agreement indicate that other Asian economies face a rising risk of higher tariffs.

Currently, most countries have a "base" tariff rate of 10% for exports to the U.S. Nomura Securities senior economist Yuben Paresel estimated that if the U.S. wants to crack down on "transshipment" through Southeast Asian markets, the regional average tariff would need to rise from 10% to 15.5%. He believes that the U.S. may also try to impose "transshipment" tariffs on other Asian economies.

"The Trump administration is saying, 'If you want to continue being a U.S. trade partner, we need to see strategic decoupling,' " said Steve Okun, CEO of the geopolitical advisory firm APAC Advisors. "The question is, do countries around the world agree to do this?"

The New York Times believes that this U.S. move could push some countries deeply integrated with the Chinese economy into China's arms. The report states that many Asian governments are worried about how China will respond, as China has already shown willingness to take countermeasures.

"From a political perspective, we need to be careful in dealing with these two superpowers," said Professor Paveeda Panand, of the Faculty of International Business at Thammasat University in Thailand. "China is a very important economic power, not only a source of imported goods, but also a source of investment and a destination for exported goods."

Pham The Anh, head of the Department of Economics at the University of National Economics in Hanoi, Vietnam, added that this would "anger" Vietnam's largest trading partner, China. He said that Vietnam has been cautious in negotiations, but now faces a difficult situation.

"The purpose is to push China out," said Deborah Elms. However, for countries like Vietnam, complying with U.S. demands carries geopolitical risks. She emphasized: "This is a multi-faceted gamble, seeing how the U.S., China, and other countries' companies will respond."

On July 3, He Yongqian, a spokesperson for the Ministry of Commerce, was asked about related issues and replied that the U.S. imposing so-called "reciprocal tariffs" on global trade partners is a typical example of unilateral bullying. China has always firmly opposed it. China has noticed the situation and is conducting an assessment. China's position has always been consistent, and we welcome all parties to resolve trade disputes with the U.S. through equal consultation, but resolutely oppose any party achieving a deal by sacrificing China's interests. If such a situation occurs, China will resolutely take countermeasures to protect its legitimate rights and interests.

On the same day, Foreign Ministry Spokesperson Mao Ning pointed out that China has always advocated resolving trade disputes through equal dialogue and consultation, and that the negotiations and agreements should not target or harm the interests of a third party.

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Original article: https://www.toutiao.com/article/7523165441116652059/

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