Vietnam: Trump's Next Trade Prize, Strategic Asia Bet

Bambo diplomacy works after all

By: Khanh Vu Duc

As US President Donald Trump barrels ahead with his second-term trade offensive, targeting allies and rivals alike with sweeping reciprocal tariffs, few expected Vietnam to become one of the more dynamic frontlines in his global economic chessboard. Yet, if last night’s announcement of a preliminary trade agreement holds together, Vietnam may well become the second country after the United Kingdom to conclude a comprehensive trade deal with Washington in this new era of managed globalization.

This not only marks a breakthrough in bilateral commerce but could also signal a deeper realignment in Indo-Pacific security. General Secretary Tô Lâm, Vietnam’s most powerful political figure, spoke with Trump via telephone to discuss bilateral relations and negotiations on reciprocal tariffs, Vietnam's Ministry of Foreign Affairs reported, a historic moment that must not only reflect growing trust between governments but, more importantly, offer the Vietnamese people a new vision of opportunity, reform, and responsible partnership with the United States. There is still no official word on whether Lâm will visit the White House in early July as rumored. He reiterated his invitation for Trump and the First Lady to visit Vietnam, and expressed his hope to meet in the near future.

Under the terms of the agreement, according to the New York Times, a 20 percent tariff will be levied on US-bound goods, down from the 46 percent Trump had threatened, and a 40 percent tariff on any “transshipping,” a provision aimed at preventing China from using Vietnam as a subterfuge for Chinese manufacturers to direct goods into the US. That complicates life for China, a provision expected to be replicated in all of Trump’s tariff-driven trade pacts and a major blow in the growing global competition between the two superpowers.

The president was quoted as saying that as part of the agreement, Vietnam would open its market to American businesses, allowing them to export to Vietnam without any tariffs.

From Surplus to Settlement

Vietnam’s emergence as a global manufacturing hub has powered its export-driven economy, but also deepened its trade imbalance with the United States. Trump has long championed tariffs as leverage, but the record US$12.2 billion trade deficit with Vietnam in May only reinforced his case.

Unlike in past standoffs with China or the European Union, Hanoi has moved quickly and pragmatically. Vietnam has made significant concessions, including reducing tariffs on US autos, LNG, ethanol, and agricultural products. Notably, its private sector has signed over US$2 billion in memoranda of understanding for American farm exports. A series of increasingly substantive rounds of negotiations have followed: the first two in May, a decisive third in Washington from June 9–12, and a follow-up virtual session on June 19. According to Vietnamese and US officials, the two sides have “narrowed gaps across all sectors.”

For the White House, the Vietnam deal serves both political and economic narratives: another victory for Trump’s trade agenda and a signal that the US can forge rules-based pacts with strategic partners in Asia. But for Vietnam, this deal must not merely be about avoiding tariffs. It must become the catalyst for structural change—modernizing the economy, strengthening governance, and bringing trade, labor, and environmental standards in line with global norms. If it fails to use this moment for reform, the costs of compliance will burden its people, not lift them.

Bamboo Diplomacy Meets MAGA Doctrine

Unlike US allies in Europe or Northeast Asia, Vietnam is not bound by defense treaties or deep institutional interdependence with Washington. It adheres to what Hanoi calls the “Four Noes”: no military alliances, no foreign bases, no siding with one country against another, and no use of force in international relations. This posture—often called “bamboo diplomacy”—has allowed Vietnam to deftly navigate between China, the United States, and regional actors like India and Japan.

But the reality on the ground is shifting. China’s aggressive behavior in the South China Sea has created urgency in Hanoi to deepen defense cooperation with Washington. The US has already provided patrol vessels, trainer aircraft, and surveillance systems to bolster Vietnam’s maritime capacity. Talks are reportedly underway to transfer more advanced platforms, including C-130 transport aircraft and even F-16 fighters.

At the December 2024 Vietnam Defense Expo, US firms dominated the exhibition halls, reflecting Hanoi’s accelerating pivot away from dependence on Russian military hardware. And in April 2025, new bilateral defense commitments were announced under the US Indo-Pacific Command framework, signaling not just equipment sales but joint planning, interoperability, and cyber cooperation.

This deepening strategic trust provides the geopolitical backdrop for what could be a landmark diplomatic event: Tô Lâm’s July 9 state visit. While neither side has formally confirmed the trip, multiple sources in Hanoi and Washington suggest that high-level scheduling is underway.

If the visit proceeds, it would be the first time the leader of the Vietnamese Communist Party visits the US in the context of a Comprehensive Strategic Partnership, a diplomatic upgrade announced during President Biden’s visit to Hanoi in 2023. And it would be a potent symbol. But symbolism is not enough. Such a visit must include honest dialogue on economic openness, rule-of-law cooperation, press freedom, and the rights of Vietnamese citizens abroad and at home. Only then can Washington become a true ally to the Vietnamese people—not just a counterweight to Beijing.

A Deal Beyond Tariffs

The proposed agreement announced overnight obviously won’t look like the Trans-Pacific Partnership or any 1990s-style free trade deal. Trump’s economic statecraft is more mercantilist than multilateralist. Instead of sweeping liberalization, the deal is likely to be transactional: Vietnam imports more American goods, enforces origin rules, and distances itself from Chinese industrial inputs. In return, Washington delays or removes punitive tariffs, possibly grants targeted visa categories for Vietnamese business and tech workers, and may consider limited tech-sharing in green energy or AI.

But this isn’t just a commercial bargain. It is a test of whether Vietnam can align its economic diplomacy with domestic reform. Whether it can strengthen transparency, reduce corruption, and create a competitive and fair environment for its youth, workers, and entrepreneurs. That responsibility lies with Vietnam’s leadership—but also with civil society, independent voices, and our democratic allies abroad.

The deal will reverberate far beyond Hanoi. For ASEAN, it shows that middle powers can engage the United States on equal terms without being swallowed into zero-sum alliances. For China, it is a clear sign that Vietnam is hedging harder—and faster—than previously believed. For other US partners like South Korea and the Philippines, it raises the bar for what Washington expects in reciprocal terms.

For Trump, the timing could not be more opportune. Amid stalled talks with Brussels and contentious wrangling with Ottawa and Tokyo, Vietnam offers a disciplined partner, a favorable trade narrative, and a symbol of America’s enduring presence in Southeast Asia. For Tô Lâm, a visit to the White House could be the moment to demonstrate that Vietnam is ready to step into the 21st century—not just as a trading nation, but as a responsible stakeholder in the democratic, rules-based order. That future is within reach. But only if he demands a deal that serves the Vietnamese people—not just its negotiators.

Khanh Vu Duc is an Ottawa-based lawyer and essayist specializing in Vietnamese and Canadian politics, international relations, and international law. He is a frequent contributor to Asia Sentinel.