Let's discuss the US increasing import tariffs.
Historically, whenever the US implements a major foreign or economic policy, it becomes a topic of global discussion, sometimes even shaking the entire world. President Donald Trump's increase in import tariffs is currently causing global upheaval, with some protesting, others demanding retaliation, and still others seeking negotiations. Let's discuss this further.
Dr. Nguyen Dinh Luong
Former Head of the Negotiation Team
Vietnam-US Trade Agreement
• July 11, 2025
XNowadays, whenever the US introduces a major foreign or economic policy, it becomes a topic of discussion worldwide, sometimes even shaking the entire globe.
US President Donald Trump's increase in import tariffs is causing turmoil worldwide, with some protesting, some demanding retaliation, and others calling for negotiations.
Let's look at this issue together:
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1.Historically, the American economy has been an open economy, and the American market is one of the most open markets in the world.
- In countries with open economies like the US, Singapore, and the Nordic countries, there are usually flexible mechanisms and low, very low taxes.
- The US advocates for an open economy and markets, allowing the world to freely invest and trade. Anyone can enter as long as their goods are competitive (except for countries under sanctions).
The whole world "goes" to America, and Americans get to buy good quality goods at cheap prices.
Thanks to the US market, many countries in Western Europe, as well as Japan, South Korea, Singapore, and more recently China, have become wealthy rapidly. In recent years, Vietnam's exports to the US have also increased very quickly.
2.Import taxes in the US account for only 2% of government revenue. Import taxes are primarily for policy purposes. The vast majority of the US government revenue comes from other taxes such as income tax, corporate tax, and property tax.
Previous presidents viewed low taxes as normal in an open market economy.
In the capitalist world, specifically within the framework of the GAT 47 Agreement from its inception to the establishment of the WTO in 1995, there were eight rounds of tariff reduction negotiations, but these reductions were mainly concentrated in Western European countries and Japan. There, high tariff barriers were erected for protection, and tariff reductions were not discussed in the US because of its low tariffs.
On the other hand, since the 1990s, previous presidents have actively promoted globalization, encouraging American businesses to move overseas to exploit resources and cheap labor to enrich themselves and the United States.
3.Things were different during President Donald Trump's term. Trump changed the policy, with his motto being "America First." He especially wanted American and foreign businesses to invest and establish production in the US, particularly in high-tech and critical sectors.
Trump argued that allowing foreign countries to freely exploit the vast US market with such low taxes was unfair and unequal. The US president demanded increased taxes, on everyone, including friends and partners, and called for increased tariffs on goods in transit.
Trump's sudden and high increase in import and export tariffs disrupted established value chains, impacting globalization and forcing both the United States and the world to move towards protectionism.
According to the agreement, Vietnam's import tax into the US market is 20% (to be specified later); and 40% for transit goods. US goods entering Vietnam are not subject to tax.
- Whether a 20% tariff is high or low depends on whether Vietnamese goods will win or lose in the US market. Hopefully, with a lower tariff than direct competitors, Vietnamese goods will win (other countries have tariffs of 25-40%, and possibly slightly lower after negotiations with some countries).
- If we win, Vietnam's exports to the US will continue to increase, and the US will remain our most important market, even as we diversify and multilateralize.
- If exports to the US increase, US investment and foreign investment in Vietnam will soon increase rapidly, including in high-tech and energy sectors…
1.The immediate challenge for businesses is that, for a long time, both Vietnamese and American businesses have been heavily dependent on foreign sources for raw materials and components.
Vietnam needs to quickly "localize" the production of enough components, accessories, and raw materials that are currently being imported.
2.Vietnam must resolutely eliminate goods falsely labeled "Made in Vietnam" from being exported to the US and other markets.
And, once committed, it must be implemented. The United States will urge and support Vietnam and other countries in implementing it.
3. We need a clean and reputable trade environment in the global market, as Vietnam is a reliable partner. A clean trade environment helps Vietnam develop rapidly and sustainably, contributing to the building of a developed society.
1A bold decision that Vietnam dared to make, something few would have thought possible.
2.Imports of American goods into Vietnam will increase rapidly, and the trade volume between Vietnam and the US will be large.
The US trade deficit will decrease; however, in the medium term, the US will not be able to close the deficit because American goods are expensive and Vietnam's purchasing power is still limited.
3Competition in the Vietnamese market between American and Vietnamese goods, and between American and goods from other countries, will be fierce.
4.Vietnamese goods will quickly improve and enhance their quality to match that of American goods in the Vietnamese market and the global market.
1Thanks to General Secretary To Lam's negotiating skills: close monitoring, timely action, and tact.
2.Accept a zero import tax on US goods into Vietnam.
3Vietnam has good relations with the United States.
4.A conscientious American in general, and a US President in particular, deep down feels that they still owe Vietnam a debt due to 30 years of war and embargo, which left behind so much suffering…; they cannot bear to do anything that would harm Vietnam's development, and besides, the US wants to draw Vietnam closer, at least to prevent Vietnam from siding with anyone against the US.
5.And there may be other reasons as well.
