Vietnam Offers Zero Tariffs in Bold US Trade Gambit

Vietnam has launched an unprecedented diplomatic initiative by offering to eliminate all tariffs on American imports if the United States reciprocates, a dramatic proposal aimed at averting punishing 46% duties threatened by President Donald Trump’s administration. This bold negotiating position, communicated directly during a phone call between Vietnam’s Communist Party General Secretary To Lam and President Trump, represents the most aggressive response yet from countries targeted in America’s sweeping global tariff strategy that has disrupted international markets and supply chains, according to CNBC.

The United States has temporarily paused implementing the 46% reciprocal tariffs on Vietnam for 90 days, providing a critical window for negotiations that could reshape economic relations between the two countries, as Reuters reports. Vietnamese officials have emphasized their determination to protect an export-driven economy that derived nearly 90% of its annual GDP from exports of goods and services in 2023, according to World Bank estimates, and has emerged as a key manufacturing hub for global companies seeking alternatives to China.

Diplomatic Urgency Amid Manufacturing Revolution

Vietnam’s rapid emergence as a global manufacturing powerhouse has coincided with intensifying US-China trade tensions, positioning the Southeast Asian nation as a primary beneficiary of companies implementing “China-plus-one” diversification strategies. This transition began accelerating in 2018 when Trump launched his first trade war against China, with Vietnam attracting billions in foreign investment as companies sought politically safer manufacturing locations, according to Rest of World.

“The reciprocal tariff on China still complicates the issue for Vietnam as China is Vietnam’s leading trade partner and provides parts and components for Vietnam’s manufacturing sector,” explains Hanh Nguyen, a doctoral researcher at the Australian National University focusing on Southeast Asia’s economy. This interconnection creates vulnerability despite Vietnam’s diplomatic efforts, as its manufacturing sector remains deeply integrated with Chinese supply chains and components.

Economic Stakes Reach Critical Thresholds

Analysts at OCBC Bank estimate that the proposed 46% tariffs could shave 1.2 percentage points off Vietnam’s economic growth in 2025, potentially reducing GDP growth to 5% and significantly undermining Hanoi’s ambitious target of “at least 8%” for the year. This economic vulnerability explains Vietnam’s willingness to take drastic measures, including offering zero-tariff proposals that would fundamentally alter its trade policy.

Despite Vietnam’s dramatic offers, White House trade advisor Peter Navarro has expressed skepticism, describing Vietnam’s zero-tariff proposal as insufficient to warrant cancellation of the new levies. “About $5 [billion] of that is just Chinese product that comes into Vietnam, they slap a made-in-Vietnam label on it, and send it here to evade the tariffs,” Navarro claimed in a television interview, highlighting American concerns about transhipment issues that have complicated negotiations.

Vietnam’s Anti-Transhipment Promises

In a strategic move to address American concerns, Vietnam has prepared to crack down on Chinese goods being shipped to the United States through its territory and will tighten controls on sensitive exports to China. These offers include new declaration and approval procedures for such products, according to government proposals that aim to reassure Washington about transhipment abuses, as Reuters reports.

“Vietnam is ready to deal with existing issues on the basis of mutual interests,” Vietnam’s trade minister Nguyen Hong Dien stated during recent diplomatic exchanges, signaling Hanoi’s willingness to address American concerns about trade flows. These negotiations occur as Vietnam walks a delicate diplomatic balance—the country is scheduled to host Chinese leader Xi Jinping for a state visit while simultaneously pursuing improved trade terms with the United States.

Broader Regional Trade Strategies Emerge

Vietnam’s approach reflects a wider regional response to American tariff threats. The Association of Southeast Asian Nations (ASEAN), America’s fifth-largest trading partner last year, has called for constructive dialogue with the Trump administration rather than retaliatory measures. “We express our common intention to engage in a frank and constructive dialogue with the U.S. to address trade-related concerns,” ASEAN ministers stated in a joint declaration, according to Radio Free Asia.

While Vietnam’s zero-tariff gambit represents the most dramatic proposal, other countries like South Korea are pursuing similar negotiations to reduce proposed tariffs. This collaborative approach distinguishes ASEAN’s response from China’s more confrontational strategy, with regional leaders calculating that cooperation offers better prospects than escalation. The outcome of Vietnam’s negotiations could establish important precedents for how smaller economies navigate trade tensions between global superpowers.