Vietnam and US to begin trade agreement talks after tariff pause

Hanoi and Washington move toward a reciprocal trade deal following Trump’s tariff delay.

A customer shops inside a Lululemon store in Miami Beach, Florida, on April 3, 2025. The company reported that 40% of its products are made in Vietnam, which was hit with a 46% U.S. tariff, leading to a stock drop of over 10% during midday trading. Photo by Joe Raedle/Getty Images

By Anna Fadiah and Hayu Andini

Vietnam and US to begin trade agreement talks after tariff pause, marking a critical shift in the evolving economic relationship between the two nations. This development came just hours after President Donald Trump temporarily halted the enforcement of a significant 46 percent tariff on Vietnamese exports—an abrupt move that had sparked concern across Southeast Asia’s manufacturing sector.

According to a statement released by the Vietnamese government on Thursday, Hanoi confirmed that the United States has agreed to initiate formal negotiations for a reciprocal trade agreement. This decision follows diplomatic talks between Vietnam’s Deputy Prime Minister Ho Duc Phoc and U.S. Trade Representative Jamieson Greer. Their meeting, which took place in Washington, underscored a mutual commitment to finding a balanced solution that promotes stable and mutually beneficial trade relations.

From tension to negotiation

The United States had emerged as Vietnam’s largest export market in the first quarter of the year, making the 46 percent tariff—announced by Trump as part of a broader trade offensive—a potentially devastating blow to Vietnam’s economy. The move had initially been interpreted as an extension of Trump’s aggressive trade policies, reminiscent of the hardline stance he took against China during his previous administration.

However, in a surprising shift, Trump announced on Wednesday that the imposition of the stiff new tariffs would be paused. This sudden policy adjustment appeared to open the door for Hanoi and Washington to engage in more constructive dialogue. Deputy Prime Minister Phoc swiftly followed up with an official proposal to launch negotiations for a bilateral trade deal.

Speaking through a government statement published on Vietnam’s official news portal, Phoc said, “The two sides should soon negotiate a bilateral trade agreement… to promote stable and mutually beneficial economic and trade relations.”

Inside the high-stakes talks

Phoc has been directly appointed by Vietnam’s new top leader, To Lam, to lead the country’s tariff negotiations with the United States. His visit to Washington was a whirlwind of diplomatic engagements, including high-level meetings with senators, business leaders, and international organizations.

According to the statement, U.S. officials responded positively. “The United States agreed that the two sides should initiate negotiations on a reciprocal trade agreement, which would include tariff agreements, and asked technical levels from both sides to begin discussions immediately.”

The timing of these discussions could not be more crucial. Vietnam’s economy has leaned heavily on its export-driven manufacturing sector, with much of that trade dependent on access to the U.S. market. In 2023 alone, Vietnam exported more than $110 billion worth of goods to the United States, ranging from electronics to apparel.

A reciprocal trade deal could offer long-term stability in this critical trade corridor, while also helping to reduce Vietnam’s dependency on a single export market by encouraging more balanced trade practices.

Business and industry reactions

Vietnamese businesses have largely welcomed the move. Vietjet, the country’s leading budget airline, announced on Thursday that it had signed new contracts with U.S.-based suppliers and aerospace firms. The deals were presented as part of a larger effort to strengthen commercial ties between the two countries amid ongoing negotiations.

Local business groups have also praised the shift in tone from Washington. “The pause in tariffs gives us hope,” said Nguyen Van Binh, a representative of Vietnam’s textile export association. “But what’s more important is that our two countries are sitting down to talk about the future. A bilateral trade agreement will bring long-term predictability.”

Still, concerns remain. If the talks fail or stall, the threat of tariffs could return, casting a shadow over investment and business planning in Vietnam’s industrial heartlands.

Trump’s unpredictable strategy

Analysts remain divided over President Trump’s endgame. While some see the temporary tariff pause as a tactical retreat, others view it as a calculated bargaining chip to extract concessions from Vietnam at the negotiating table.

During his announcement, Trump said the decision to delay the tariffs was made to “allow our friends in Vietnam to work with us in good faith,” though he did not clarify what metrics would be used to determine whether progress had been made.

Trade policy experts have noted that the move aligns with Trump’s broader pattern of using tariffs as leverage. “He’s not backing down. He’s resetting the game,” said Anthony McFadden, a Washington-based trade consultant. “What we’re seeing is classic Trump: pressure first, then deal-making.”

What’s at stake for both nations

For Vietnam, reaching a reciprocal trade agreement with the United States would be a significant diplomatic and economic milestone. Not only would it shield key industries from disruptive tariffs, but it would also strengthen Vietnam’s position as a reliable partner in the global supply chain.

For the United States, the deal could help narrow the trade deficit with Vietnam—a frequent point of contention under Trump—and offer American exporters greater access to one of Southeast Asia’s fastest-growing markets.

Strategically, the deal would also deepen U.S. engagement in the Asia-Pacific, where China’s influence has been steadily growing. A stronger economic partnership with Vietnam could serve as a counterbalance in Washington’s broader geopolitical strategy.

A roadmap ahead

While the timeline for the proposed trade agreement remains unclear, officials from both sides have indicated that talks will begin immediately at the technical level. Trade negotiators are expected to work through complex issues including tariff structures, product classifications, and rules of origin.

Deputy Prime Minister Phoc emphasized that Vietnam is committed to fair and open trade. “We want to build a strong, transparent, and lasting partnership with the United States,” he said.

For now, businesses and investors are watching closely. With tariffs on hold and negotiations underway, the spotlight is now on how both countries can turn a potential trade war into a new chapter of cooperation.