New Tariffs Leave Vietnam, Top Robusta Coffee Producer, With New 20% Rate – CoffeeTalk

The US-Vietnam trade agreement has been a topic of interest for companies operating in one of the most vibrant Asian economies, Vietnam. The deal, first unveiled by US President Donald Trump, includes a differentiated tariff setting, with a 20% American surtax on Vietnamese-produced goods and a 40% levy on those trans-shipped from elsewhere through Vietnam. This is largely aimed at China, which produces many of the inputs companies operating in its southern neighbor use for assembling their products. Do Thi Thuy Huong, an executive board member of the country’s main electronics association, said that the new tariff schedule will be quite difficult for Vietnam. However, it is a motivation for the country’s economy, especially for the manufacturing sector, to develop more in an actual and substantial manner and boost localization.

Vietnam emerged about a decade ago as a rapid-growth, export-led economy, with America as a prime customer. In recent years, policymakers in Washington actively encouraged the nation to take a bigger role in US supply chains, as a counter to China, its geostrategic rival. Trump’s first trade war with Beijing saw Chinese businesses rush to relocate across the border.

The new 20% and 40% levies leave Vietnamese exports with much higher barriers than before April, but the country now stands out for sealing only the third arrangement yet that Trump has announced with any trading partner. Vietnam said Thursday its trade negotiators were still working with their US counterparts to finalize the details of the agreement. Treasury Secretary Scott Bessent said his understanding was a deal had been “finalized in principle.”

Economists and business representatives said it will be crucial to monitor what rates Vietnam’s competitors get. Duong Thi Ngoc Dung, vice chairwoman of Vietnam’s Textile & Apparel Association, said she is on the lookout for what countries like India, Thailand, Indonesia, Cambodia, Sri Lanka, and Bangladesh end up with. If Vietnam faces a 20% tariff while other countries only get 10-15%, it will put significant pressure on them and make it harder for Vietnamese products to stay competitive.

Across industries, companies’ margins will be under pressure. The new levy will “hurt our business as customers will ask us to share it with them,” said Paul Yang, vice president of Yang Cheng Wooden Industries International, which makes indoor wood furnishings for the likes of Williams-Sonoma, Inc. and Crate & Barrel Holdings Inc. Vietnam is a significant hub for both Apple Inc. and Samsung Electronics Co., with numerous suppliers establishing a presence there including key players like Foxconn, GoerTek Inc, and Luxshare Precision Industry Co. “This deal will affect Vietnam’s manufacturing for the short term,” said Huong at the Vietnam Electronics Industries Association. “For the long term, the economy will be more healthy.”

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