This week, Vietnam made several trade concessions to the United States to prevent the Trump administration from imposing tariffs next week. According to Vietnam’s Ministry of Finance, the tariff on U.S. liquefied natural gas (LNG) will decrease from 5% to 2%, duties on cars will drop to 32% from 45%-64%, and the tariff on ethanol will be reduced from 10% to 5%.
Nguyen Quoc Hung, head of the Ministry of Finance’s tax policy department, stated that these reductions improve trade balances and help Vietnam navigate the global geopolitical and economic landscape. The decree for these tariff cuts will be finalized by the end of the month and take effect immediately. Vietnam also plans to remove tariffs on American ethane and reduce duties on imports such as chicken thighs, almonds, apples, cherries, and wooden products.
While the U.S. and Vietnam have grown closer due to shared concerns over China, Vietnam may face scrutiny from the Trump administration for its large trade surplus with the U.S., which reached a record $123.5 billion in 2024. Vietnam now holds the third-largest trade surplus with the U.S., after China and Mexico, both of which have faced tariffs. There are concerns that the administration could target Vietnam due to reports suggesting Chinese companies are using Vietnam to bypass U.S. tariffs on Chinese goods.
The Trump administration is expected to announce new tariffs on April 2, following a review by the Commerce and Treasury departments analyzing persistent trade deficits.
Vietnam has been preparing for U.S. tariffs, partly due to the trade imbalance, which was also a concern during Trump’s first term. Earlier this month, Vietnam’s Minister of Trade, Nguyen Hong Dien, led a delegation to Washington where major Vietnamese companies signed over $4 billion in agreements with U.S. companies. These included a memorandum of understanding between PetroVietnam and GE for LNG-fired power plants, the first of which will begin operations in June. Vietnam is negotiating with American suppliers to source LNG for these plants.
Vietnam has long advocated for a stronger U.S.-Vietnam strategic relationship, according to Joshua Kurlantzick of the Council on Foreign Relations. The recent tariff cuts are seen as a goodwill gesture to avoid U.S. retaliation. To further avoid tariffs, Vietnam has approved a trial launch of Starlink satellite internet services, maintaining full control over the service.
Vietnam’s efforts to reduce its trade surplus with the U.S. include the tariff cuts on U.S. LNG, cars, ethanol, ethane, and other imports. These measures are part of a broader effort to prevent further tariffs, as Trump is expected to impose reciprocal tariffs on various countries on April 2, though some nations might receive exemptions.
