Trump declares a trade agreement with Vietnam

Trump said Vietnam would give the US full access to its markets.

On Wednesday, President Donald Trump announced that the United States will impose a 20% tariff on imports from Vietnam as part of a new trade agreement finalized during last-minute discussions.

Previously, products imported from Vietnam to the US were subject to a 46% tariff, which was scheduled to take effect next week as part of Trump's "reciprocal" tariffs introduced in April.

Many other countries, including the European Union and Japan, are still working to finalize their own agreements with the US ahead of the anticipated tariff increases.

According to Trump in a social media update, the new deal stipulates that Vietnam will not impose any tariffs on US goods.

Tariffs, which function as a tax on imports, are typically paid by the purchasing company rather than the manufacturer of the product.

Although importers have the option to absorb the additional cost, they frequently opt to transfer it to the consumer. Numerous US trading partners are concerned that this will reduce demand for products manufactured in their countries.

In what Trump referred to as the "Great Deal of Cooperation", the US will also implement a higher tariff of 40% on goods that are routed through Vietnam in a practice known as "trans-shipping".

Peter Navarro, who serves as Trump's senior advisor on trade and manufacturing, has indicated that one-third of all Vietnamese exports to the US are actually Chinese goods that have been sent through Vietnam.

The president stated on social media: "Vietnam will undertake an unprecedented action, granting the United States of America COMPLETE ACCESS to their Markets for Trade.

In other words, they will 'OPEN THEIR MARKET TO THE UNITED STATES,' meaning that we will be able to sell our product into Vietnam at ZERO Tariff."

Vietnam has become a major manufacturing hub for a number of major brands such as Nike, Apple, the Gap and Lululemon. It was a beneficiary of firms moving factories out of China to avoid the tariffs Trump announced during his first term in office.

Share prices of companies making goods in Vietnam initially rose on news of the deal, although those gains were trimmed after it emerged products will still face a 20% tax.

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, told the BBC World Business Report he was optimistic that the trade deal leaves Vietnam "in a good position", adding that "companies that ship from [Vietnam] to the US are going to keep doing it".

But on the proposed tariff for so-called trans-shipping, Mr Sitkoff questioned the definition of the term, suggesting it can be "a vague and often politicised term in trade enforcement".

"It's unclear how much illegal re-routing Vietnamese officials will even be able to catch, or how much exists," he said.

Vietnam's General Secretary To Lam held a phone call with Trump on Wednesday, during which he reiterated an invitation for the US president to visit the country.

Separately, the Trump family has recently announced development projects in Vietnam.

The country's government approved a plan by the Trump Organization and local business Kinh Bac City Development to invest $1.5bn in hotels, golf courses and luxury real estate.

The Trump Organization is also scouting for locations to build a Trump Tower in Ho Chi Minh City.

Trump initially imposed steep levies on trading partners around the world in April , citing a lack of "reciprocity", but then announced a pause where they were all lowered to 10%.

Many countries then approached the US to negotiate trade deals, according to the White House.

Since April, Washington had so far only announced a pact with Britain and a deal to temporarily lower retaliatory duties with China.