03.07.25 - Deal 3 of 90
Last night, US President Donald Trump announced a preliminary trade agreement with Vietnam. Based on early released details, the deal includes:
A 20 % tariff on Vietnamese exports to the US, down from an initially proposed 46% during “Liberation Day”.
A 40 % tariff on trans-shipped goods, aimed at blocking rerouted Chinese exports.
Zero tariffs for US exports into Vietnam.
There is no final implementation date yet. It is a framework deal with further negotiations pending.
Markets: after latest rally, Vietnamese stocks declined after the announcement and the currency weakened - short-term positive reaction on some apparel stocks exposed to Vietnam (Nike, On Holding, Lululemon)
My view: On first sight, the newly announced tariff deal with Vietnam appears less severe than initially feared. The originally proposed 46% tariff was scaled back to 20%, offering some relief. However, this remains a net negative for Vietnamese exporters: costs are still rising, and competitive pressure within the region will intensify as global buyers may reassess supply chains.
For context, markets prices in an average US tariff level of roughly 15%. We have now UK with 10%, China 55% and Vietnam 20%.
The Vietnam agreement marks deal number three out of 90, as part of Trump’s “America First” strategy to restructure global trade away from China and bringing production back to the US. There are only six days remaining until the July 9 deadline. Hopes for a wave of last-minute deals are not fading yet. Clearly, the number of concluded agreements is far below what markets had anticipated just weeks ago.
Will Trump extend the deadline? He stated firmly: no. Will he hold the line this time?
Markets are still betting on the so-called TACO trade — Trump Always Chickens Out. By now, the speculators got the reward for taking the risk. Will it soon going to be different?
For me, this is clearly not the end of tariff risk. The latest deal may support short-term market optimism, with hopes rising for more agreements to follow during the next days. However, under the surface, the risks and negative side effects from already-announced or soon-to-be-implemented tariffs implemented tariffs remain. The structural damage may still unfold over time, especially in terms of inflation, supply chain realignments, and corporate margins.
Position Disclosure:
I am invested in Vietnam via an ETF with a long-term investment horizon.
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