Vietnam has asked the U.S. to recognize it as a market economy and to lift restrictions on high-tech exports, longstanding requests Washington continues to ignore.
President Donald Trump’s recent announcement of a trade deal with Vietnam reveals less about diplomatic success and more about Trump’s familiar tactic of ‘economic coercion dressed up as negotiation’.
By initially threatening a crushing 46 percent tariff on Vietnamese goods and then settling for 20 percent, Trump positions the outcome as a concession. In truth, it’s a calculated retreat from a self-imposed extreme, leaving Vietnam little choice but to accept a deeply asymmetrical arrangement to avoid something worse.
This is not a bilateral agreement built on mutual respect or long-term vision. It is a deal extracted under duress. Vietnam, the United States’ 10th-largest trading partner and an increasingly critical hedge against Chinese influence in Asia, is compelled to accept zero-percent tariffs on incoming U.S. goods and grant preferential market access, most notably to large-engine American cars. In exchange, its own exports will still face steep levies. The imbalance is not subtle.
Unlike larger economies such as Japan or the European Union, which can resist heavy-handed U.S. demands, Vietnam remains economically vulnerable. This vulnerability is being exploited. As Mary Lovely of the Peterson Institute aptly put it, this deal “forces a smaller country to eat it.” It is a stark reminder that in Trump’s trade philosophy, leverage is not just a means, it is the message.
Adding complexity is the issue of transshipment. Chinese goods rerouted through Vietnam to dodge U.S. tariffs are now targeted with a 40 percent tariff. The challenge, however, lies in enforcement. The line between fraudulent relabeling and legitimate transformation of goods is murky at best. Experts warn that implementing such a crackdown will require a level of oversight and clarity that is sorely lacking.
The broader context only deepens the contradictions. Since the U.S. began its trade war with China, Vietnam has emerged as a major beneficiary. Its exports to the U.S. have nearly tripled, from under $50 billion in 2018 to $137 billion in 2024. Yet U.S. exports to Vietnam have grown just 30 percent during that time. This growing imbalance is precisely what Trump seizes on to justify his punitive approach, ignoring that it is the result of his own policies that redirected supply chains away from China.
There are political optics at play, of course. With a self-imposed July 9 deadline to finalize deals or trigger broader tariff hikes, the Trump administration is scrambling to show progress. The Vietnam deal, like earlier ones with the United Kingdom and China, is more a framework than a finished agreement. Vietnam itself has not confirmed the specific tariff levels Trump announced, a notable omission that suggests the details remain unsettled, or at least contested.
This model—threaten, pressure and, in the end, claim victory—may offer short-term domestic gains, but it weakens the credibility of U.S. trade policy abroad. It signals to other nations that negotiation with Washington means giving more than you get and that fair play is secondary to political theater. For American businesses, the uncertainty this creates in global supply chains can be costly. For consumers, higher import tariffs mean higher prices.
Vietnam has asked the U.S. to recognize it as a market economy and to lift restrictions on high-tech exports, longstanding requests Washington continues to ignore. In the current climate, such appeals are unlikely to gain traction. Power, not partnership, is setting the terms.
This deal may be framed as a win, but it exposes a deeper problem. U.S. trade policy, under this approach, is increasingly transactional, erratic and driven more by optics than outcomes. For now, Vietnam has avoided the worst. But the precedent being set, that small nations must yield or face economic punishment, risks long-term damage to America’s credibility and to the principles of fair and open trade the country once championed.
OpEd Column Syndication 