Japan, Vietnam, EU Contest Terms of US Trade Deals Behind the Scenes

Cracks emerge amid confusion over timing, investment conditions and other details

- Walter Sim

TOKYO - US President Donald Trump has chalked up a spate of headline-grabbing trade deals as the clock ticks down to his Aug 1 "reciprocal" tariffs deadline.

But cracks are emerging over their precise terms amid confusion over their timing, implementation and investment conditions. Critics have reportedly described the agreements as "flimsy napkin deals".

The devil lies in the nitty-gritty, and leaders from Asia and Europe have openly contradicted the US on the terms of agreement.

For Vietnam, The Straits Times understands that the proposed rates announced were not even what Hanoi had agreed on.

Mr Trump touted a deal with Hanoi on July 2, proposing a 20 per cent "reciprocal" tariff and a 40 per cent rate for trans-shipments. Unlike Japan and the European Union, Vietnam believes it would be counterproductive to oppose Mr Trump publicly and directly, so both sides are now quietly hashing things out.

"The strategy here is to work on the definition of goods that are deemed to be trans-shipped, not to change the headline number of 40 per cent itself," a source with knowledge of Vietnam's ongoing trade talks with the Trump administration told ST.

"Ultimately, we hope to be able to persuade the White House that it is a fact that the Chinese are manufacturing products that form the bulk of the goods that we make. It is not fraud, but simply how the supply chains work," the person added.

For Japan, a deal was struck on July 22 for the US to lower the "reciprocal" tariff rate from 25 per cent to 15 per cent, and car levies from 27.5 per cent to 15 per cent.

As part of the deal, Mr Trump said Japan pledged US$550 billion (S$710 billion) in investments as a "signing bonus", with the US to rake in 90 per cent of the profits.

With the EU, the US agreed on July 27 to halve tariff rates to 15 per cent, with the bloc committing an additional US$600 billion in investments in the US.