Vietnam fully opens its market in exchange for a 20% tariff from the United States!

By: HSEclub NewsJul 03, 2025

Recently, a statement from the White House completely rewrote the rules of the game in US-Vietnam trade relations. The "amazing results" that Caroline claimed in the briefing are a typical "unequal treaty" in the eyes of professional economists. Vietnam fully opened its domestic market in exchange for a 20% basic tariff on its exports from the United States. This seemingly balanced transaction actually hides a structural trap. When American automobiles, agricultural products and energy products enter the market at zero tariffs, Vietnam's local industries will face a catastrophe. This unilateral market access concession is tantamount to economic suicide.



A careful study of the text of the agreement reveals that the United States's 40% punitive tariff on "third-country transit goods" is actually a precise attack on China's industrial chain transfer. Vietnam's transit trade in electronics, textiles and other industries that it has undertaken in recent years will suffer a heavy blow. This is more of a political tool for the United States to restructure the Asia-Pacific supply chain than a trade agreement. What is more worrying is that the Vietnamese negotiating team revealed all its cards too early and did not set up any transitional protection in key areas such as agricultural product market access. This strategic shortsightedness will lead to the collapse of its agricultural system under the impact of US subsidies for corn and soybeans.


Analysts pointed out that the Vietnamese government may have underestimated the double-edged sword effect of the agreement. The short-term consumption dividend brought by the zero-tariff influx of US goods cannot offset the long-term blood loss of the local manufacturing industry. Taking the automobile industry as an example, the market share of local Vietnamese brands is less than 5%, and there is almost no room for survival under the crush of American brands such as Ford and Tesla. The so-called "excellent" US agricultural products are actually price dumping formed by huge subsidies, which will directly destroy the livelihoods of millions of rice farmers in Vietnam. This decision to exchange strategic industrial security for superficial trade growth is destined to be proven by history to be a major mistake.


The deep crisis of the agreement is also reflected in the level of digital economic sovereignty. The United States requires Vietnam to fully open up the entertainment product market, which means that content platforms such as Netflix and Disney will monopolize local cultural consumption. This one-way flow of cultural products will not only squeeze the local film and television industry, but also subtly change the value recognition of the younger generation. When Vietnam's streaming platforms and social networks are controlled by American companies, the so-called economic agreement has evolved into a hotbed of digital colonization. This erosion of soft power is more destructive than tariff shocks, but it has not been included in the Vietnamese government's profit and loss assessment system.


What is worth pondering is the "90-day suspension period" warning deliberately emphasized by the White House, which actually exposes the political coercive nature of the agreement. The United States obviously regards Vietnam as an extended battlefield of the trade war with China, and forcibly reshapes the Asia-Pacific industrial structure through tariff leverage. Vietnamese negotiators may have misjudged their own geopolitical value and failed to stick to the bottom line of "strategic autonomy" like India. When the agreement stipulates that the United States has the right to unilaterally initiate an "anti-circumvention investigation", Vietnamese companies are actually placed under the sword of Damocles, which may face a 40% tariff at any time. This uncertainty will completely kill the confidence of foreign investment in the long term.


Historical experience shows that developing countries always pay a heavy price when signing unequal trade agreements with developed countries. After Mexico signed the North American Free Trade Agreement in 1994, its local corn industry was destroyed by American genetically modified crops; when China joined the WTO in 2001, it had to strive for at least 15 years of industrial protection, and Vietnam's full surrender at this moment seems particularly hasty. The provisions in the agreement on strong protection of intellectual property rights and prohibition of technology transfer will permanently lock Vietnam in the low end of the global value chain. This transaction of exchanging development space for short-term export growth will eventually make Vietnam fall into the middle-income trap and be unable to extricate itself.


The world is currently undergoing a drastic transformation from globalization to blockization, and wise countries are strengthening the protection of economic sovereignty. Vietnam, however, has gone the other way and handed over the strategic industry lifeline related to the national economy and people's livelihood. This choice is more like an attack of development anxiety of the ruling elite than a helpless compromise. When American agricultural products occupy supermarket shelves and Hollywood movies monopolize theater schedules, Vietnam loses not only market share, but also a historical opportunity for independent development. This agreement will eventually prove to be the most expensive indenture signed by the global South to developed countries in the 21st century, and its bitter fruits may burst out in five years.

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