New US-Vietnam Trade Deal Raises Red Flags For India: GTRI

(MENAFN- KNN India) New Delhi, July 3 (KNN) A newly announced trade agreement between the United States and Vietnam has raised alarms across Asia's export markets, with Indian exporters and policymakers urged to approach future trade negotiations with caution.

Under the new pact announced by US President Donald Trump on his Truth Social platform, a flat 20 percent tariff will be imposed on all Vietnamese exports to the United States-a measure expected to disrupt Vietnam's USD 135 billion export trade and potentially reverse two decades of trade liberalisation.

The Global Trade Research Initiative (GTRI), in a recent report, outlined key risks posed by the deal and its broader implications for India, particularly in the context of its ongoing trade discussions with the US.

“For Indian exporters eyeing Vietnam as a competitor and partner in regional value chains, the deal presents both cautionary lessons and strategic implications,” the GTRI report stated, according to news agency ANI.

The new trade pact supersedes Vietnam's 2000 Bilateral Trade Agreement (BTA), which had granted Vietnamese exports preferential access to the US with tariff rates ranging from 2 to 10 percent.

Key export-driven sectors-such as textiles, footwear, seafood, and furniture-that helped boost Vietnam's exports from USD 800 million in 2001 to over USD 135 billion will now forfeit that cost advantage.

Trump declared that“Vietnam will do something that they have never done before - give the United States of America total access to their Markets for Trade.”

In exchange, Vietnamese exports to the US will be subject to a 20 per cent tariff-reduced from the initially proposed 46 per cent, but still more than twice the rates offered under the original Bilateral Trade Agreement (BTA).

The GTRI report emphasises the strategic and cautionary lessons for India. As Indian negotiators near the conclusion of their own trade talks with the United States, the report urges them to remain alert to risks such as sudden reversals in tariff concessions, ambiguous rules of origin, and rigid duty structures that could destabilise long-term trade frameworks.

According to the GTRI, Indian exporters-especially those engaged in supply chains overlapping with Vietnam-should be attentive to shifting US trade policies in Asia.

Understanding the vulnerabilities exposed by the US-Vietnam deal, the report argues, can help India avoid similar disruptions and ensure greater resilience in its external trade architecture.

(KNN Bureau)

MENAFN03072025000155011030ID1109757882