Administration's Rules Involving 'Transshipment' of Vietnam Goods Unknown
President Donald Trump posted on social media that Vietnamese goods would face a 20% tariff, rather than an originally proposed 46% reciprocal tariff, in exchange for zero tariffs on U.S. exports.
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He also wrote that if goods are transshipped, they will pay 40% tariffs.
Because the goods are dutiable based on the actual country of origin, regardless of transshipment, it seems that he means something other than what CBP considers transshipment.
Flexport CEO Ryan Peterson tweeted, "Does anybody know what a 40% tariff on transshipping means?"
Commerce Secretary Howard Lutnick's tweet defined transshipping this way: "meaning if another country sells their content through products exported by Vietnam to us -- they'll get hit with a 40% tariff."
But how much content is too much foreign content is unknown -- and may not yet be decided.
A Vietnamese news outlet characterized the agreement as a joint statement "concerning a fair and balanced reciprocal trade agreement framework."
"The US President highly valued Viet Nam’s commitment to granting preferential market access for US goods, including large-engine automobiles," the Vietnam newspaper said. "He affirmed that the US will significantly reduce reciprocal tariffs on many Vietnamese exports, and will continue to work with Viet Nam to resolve outstanding trade-related issues, particularly in priority areas of both sides."
Politico reported that it had seen a draft of the agreement, and also characterized it as a work in progress, with the two sides continuing to work on a final deal within weeks. The reporters there said the statement said the tariff reductions would apply to "tech products, footwear, agricultural commodities and consumer products including toys." It also said it didn't use the word "China."
A White House spokesman didn't answer questions about when the 20% tariffs would apply, or how transshipment would be measured.
The American Apparel and Footwear Association noted that Vietnam is the country's second-largest supplier for clothing, shoes and accessories. "AAFA is pleased that further progress is being made on reciprocal trade deals, and we hope to see additional news in the coming days," CEO Steve Lamar said in an email response to a question from International Trade Today. "We look forward to learning the details related to today’s news so that we, together with our members, can evaluate how well it will provide relief and certainty."