Trump's Vietnam trade deal stokes concern in Asia

As US president's deadline looms, the reality is that higher tariffs are here to stay, writes Bloomberg

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Vietnam's trade deal with the US is a wake-up call for Asian governments grappling with the reality that higher tariffs are here to stay.

US President Donald Trump announced a 20% tariff on imports from Vietnam, and a 40% rate for goods transshipped through the country — a move mostly targeted at curbing Vietnam's trade with China. In return, Vietnam is slashing import taxes on US goods to zero.

Although the US duties are lower than the 46% the US president had threatened to impose on Vietnam, the concessions made by the Southeast Asian nation and the higher rate for goods rerouted through the country have raised concerns in Asian capitals.

Officials in New Delhi, who are racing to clinch their own deal before a July 9 deadline when higher US tariffs kick in, say they view the Vietnam deal with a fair bit of caution. India had been seeking an exemption on reciprocal tariffs in its negotiations with the Trump administration, and Vietnam settling for a 20% rate was a worry, one of the officials said, asking not to be identified because the discussions are private.

India had also been pushing back against US demands to impose a higher tariff on goods with a larger proportion of foreign components, another official said.

The Vietnam deal suggests the US will play hardball in its negotiations with trading partners like India. New Delhi is seeking clarity on what kind of goods would carry higher levies based on foreign content, although it doesn't expect to be hit with a rate as high as Vietnam, officials said.