Vietnam hailed a long-awaited trade deal with the United States as a breakthrough on Thursday and said negotiators were working to finalise details, as business groups awaited clarity on the finer points to assess the impact of the new tariffs.
The agreement, announced by U.S. President Donald Trump on Wednesday, would place a lower-than-expected 20% tariff on many Vietnamese exports and a 40% rate for transshipments through Vietnam from third countries.
The agreement follows months of talks and a raft of concessions by regional manufacturing powerhouse Vietnam to negotiate a reduction in tariffs that were initially set at 46%, triggering alarm in the export-dependent, Communist-ruled nation.
"This is an important negotiation result, creating hope and expectations for businesses," Finance Minister Nguyen Van Thang told a cabinet meeting, adding Vietnam would also expand "harmonious and sustainable" trade relations with other countries.
The announcement followed a phone conversation between Trump and Vietnamese President To Lam on Wednesday. Foreign ministry spokesperson Pham Thu Hang said To Lam "highly values President Donald Trump's attention to Vietnam."
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, a top source of imports for Hanoi. The United States recorded a trade deficit of $123 billion with Vietnam last year, one of its highest globally.
Washington has been pushing Vietnam to reduce the use of Chinese tech in devices it assembles, posing a challenge in a nation with supply chain limitations and heavy reliance on imported components and materials for products ranging from televisions and smartphones to big-brand garments and footwear.
Following U.S. threats of punitive tariffs, Hanoi has also been cracking down on some imports from China that Washington said are illegally rerouted through Vietnam to avoid higher duties, with no or insufficient value added to justify "Made in Vietnam" labels.
China's commerce ministry said it was assessing the U.S.-Vietnam agreement and opposes any party reaching a deal at the expense of Beijing's interests.
'NOT CLEAR YET'
There was a mixed reaction from investors and analysts about a deal described by Vietnam's government only as a joint statement for a "reciprocal, fair and balanced" trade arrangement.
Vietnam is a manufacturing base for multinational firms and key details, such as rules of origin and definitions of locally manufactured versus transshipment goods, remain unclear.
Yuanta Securities Vietnam said the 40% tariff on transshipments raised questions about definitions and regulations for such goods.
"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.
The agreement could also put the spotlight on South Korean firms operating in Vietnam, including LG and Samsung, its largest single foreign investor with accumulated investment of $23.2 billion, and exports worth $54.4 billion last year - 13.4% of Vietnam's total.
Hong Sun, honorary chairman of the Korean Chamber of Commerce in Vietnam, said South Korean firms were still in the dark on what had been negotiated.
"It's not clear yet how things will move," he said. "South Korean companies having invested in Vietnam will recalculate their business plans."
ANZ Bank, however, said the deal removes major uncertainty for businesses in Vietnam, which would still remain attractive as a manufacturing hub.
"Vietnam's deal provides a benchmark for the rest of Asia in their ongoing negotiations," it said in a note.
