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For all of U.S. President Donald Trump’s bilateral trade deals, the only guarantee so far is that the devil is in the details. |
There’s current debate over what that 20 percent means. Is it 20 percent or 20 percent tacked onto existing duties?
“Our take is that the 20 percent tariff on Vietnam goods will remain on top of the duties already placed on footwear and apparel,” wrote TD Cowen analyst John Kernan in a note on Thursday.
Fashion and footwear firms are now paying a reduced rate of 10 percent through July 9, down from the 46 percent initially imposed in Vietnam when Trump first spoke about reciprocal tariffs on April 2. But what happens on July 10? Do the tariffs go back up temporarily to 46 percent until there’s an official trade agreement? Or do they stay at 10 percent temporarily as the U.S. and Vietnam finalize the terms of their agreement? What happens with Vietnamese tariffs post July 9 will likely set the framework for any other trade agreement parameters that are negotiated before the July 9 deadline.
Then there’s China. In another twist in Trump’s trade war, the U.S. cut tariffs on Chinese imports to 30 percent from 145 percent in May for 90 days so negotiations can take place through Aug. 12. That would take the total rate to 55 percent, including stack-ons from existing duties.
The wrinkle here is that U.S. Treasury Secretary Scott Bessent said the administration “set the table” for future tariff negotiations following a deescalation of U.S.-China tensions after the two agreed to a rare earth minerals trade deal. But Chinese representatives have emphasized that the country would oppose attempts by the U.S. to strike trade deals that would be contrary to China’s interests. And Trump picked up that gauntlet when he said the Vietnam trade deal would include a 40 percent transshipping levy.
China is both Vietnam’s largest trading partner and its largest supplier of production inputs. And some Chinese manufacturers are said to have circumvented China tariffs by shipping first to Vietnam before the goods travel to their final destination in the U.S. The transshipping levy targets trade between China and Vietnam.
Credit of Yahoo Finance
