US-Vietnam trade talks: Beyond tariffs lie long-term rules of game

Since July 24, Washington has imposed new tariffs under Section 301 of the Trade Act of 1974, targeting imports from 60 countries due to alleged forced labor concerns.

Vietnam is among those subject to a 12.5 percent tariff rate, while some trading partners face a lower rate of 10 percent.

However, after excluding exempted products, Vietnam’s Ministry of Industry and Trade estimates that the 12.5 percent tariff applies to only about 37 percent of the country’s current exports to the United States.

The Office of the U.S. Trade Representative (USTR) did not find that Vietnamese exports were produced with forced labor. Instead, its review focused on whether economies had enacted and effectively enforced bans on imports made wholly or partly through forced labor.

Tariffs may change, yet rules endure

Although recent attention has focused on tariff levels, the more consequential aspect may be the non-tariff commitments that could shape domestic regulations and business practices for years to come.

USTR has so far released the full text of 10 agreements on reciprocal trade (ARTs) with Malaysia, Cambodia, El Salvador, Guatemala, Argentina, Bangladesh, Taiwan, Indonesia, Ecuador and Jordan. Vietnam is not among them.

The joint statement issued by Vietnam and the United States in October 2025 merely established a framework for the two sides to continue negotiations toward a reciprocal, fair and balanced trade agreement.

At the time, the Vietnam-U.S. framework included a 20 percent reciprocal tariff imposed under the U.S. International Emergency Economic Powers Act (IEEPA).

However, that legal foundation was later undermined when the U.S. Supreme Court ruled on February 20, 2026, that the IEEPA does not authorize the president to impose tariffs.

The tariffs imposed under the IEEPA were scrapped. Washington subsequently introduced a temporary 10 percent surcharge under Section 122 of the Trade Act of 1974.

When the 150-day measure expired, it shifted once again to Section 301, imposing new tariffs linked to the treatment of imports associated with forced labor.

These developments suggest that tariff rates at any given point in time may serve primarily as negotiating leverage, with both the legal basis and the specific rate subject to relatively rapid change.

By contrast, the non-tariff commitments accepted by trading partners under ARTs could have longer-lasting implications for domestic legislation, regulatory practices and business compliance costs.

ARTs are also not equivalent to traditional free trade agreements (FTAs).

Under a conventional FTA, parties typically agree to reciprocal tariff reductions over a defined period while establishing comprehensive provisions covering rules of origin, exceptions, consultations and dispute-settlement mechanisms.

Under the ARTs published so far, partner economies typically commit to eliminating or reducing tariffs on most U.S. goods. In return, the United States generally offers a tariff ceiling, assurances regarding the treatment of future tariff measures, or exemptions for selected product categories.

“Reciprocity” in this context does not necessarily imply a fully balanced exchange of obligations.

ARTs extend well beyond the exchange of tariff concessions.

Their provisions cover areas such as the recognition of, or preferential treatment for, products that meet U.S. standards; market access for agricultural goods; intellectual property protection; disciplines on state-owned enterprises and subsidies; cross-border data flows; digital services taxes; forced labor; environmental standards; and critical minerals.

Some ARTs also include provisions on export controls, investment screening, anti-circumvention measures and coordination when the United States imposes trade or economic security measures on third countries.

Notably, several agreements require partner economies, upon notification by Washington, to adopt measures with equivalent restrictive effects on goods or services originating from a third country.

Viewed positively, such commitments could encourage institutional reforms, facilitate investment and strengthen supply-chain standards.

However, if their scope is not clearly defined, Vietnam could eventually face pressure to adjust policies governing data, investment or economic relations with third countries.

The issue warrants particular attention given Vietnam’s deep integration into ASEAN and East Asian supply chains, as well as its obligations under the World Trade Organization (WTO), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP) and numerous other free trade agreements.

A deal defined by more than tariffs

Beyond securing lower tariff rates, Vietnam's challenge is to ensure that any future agreement provides predictable rules, preserves policy flexibility and establishes compliance obligations that businesses can meet.

Vietnam's first priority in the negotiations should be securing greater certainty over any tariff preferences included in a future agreement.

The final text should clearly define the tariffs covered, the method of calculation, exempt product categories, applicable rules of origin, criteria for determining transshipment or circumvention, and the circumstances under which Washington could revise or withdraw preferential treatment.

Before imposing adverse measures on the grounds that Vietnam has failed to fulfill its commitments, there should be requirements for prior notification, supporting evidence, a reasonable remediation period and meaningful consultations.

Vietnam should also have the right to request a review when domestic laws or enforcement practices have changed.

Forced labor provides a case in point.

On July 22, 2026, Vietnam issued Decree No. 292/2026/ND-CP, prohibiting the importation of products and goods produced wholly or partly through forced labor.

However, enacting the regulation is only the first step.

The greater challenge lies in translating the legal requirement into a verifiable enforcement framework, including clear risk-identification criteria, reporting mechanisms, verification procedures, customs enforcement powers, inter-agency coordination and transparent disclosure of enforcement outcomes.

Future discussions with the USTR are likely to hinge not only on the legal framework itself, but also on implementation plans, enforcement data and tangible results.

Vietnam should seek U.S. recognition of domestic mechanisms that achieve equivalent outcomes, rather than being required to replicate American institutions or procedures.

The agreement should also establish clear criteria and timelines for reviewing tariff adjustments.

Without transparent conditions for tariff reductions, businesses will have little certainty about what standards they are expected to meet, while policymakers may struggle to develop credible implementation plans.

Another key consideration is maintaining sufficient policy flexibility.

Vietnam should avoid automatically adopting future U.S. trade restrictions against third countries and instead evaluate measures related to export controls, investment screening, data governance and trade restrictions through the lens of domestic law, national interests and existing international obligations.

If a future agreement grants preferential treatment to most U.S. goods, Vietnam may also need to clarify the legal basis for doing so under the World Trade Organization's Most-Favored-Nation (MFN) principle.

Simply labeling a document a “trade agreement” does not automatically create an exception to WTO rules; the scope of liberalization, implementation schedule and notification procedures would need to be carefully designed to ensure compliance.

For Vietnamese businesses, compliance is likely to extend well beyond obtaining certificates of origin.

Companies may be expected to demonstrate traceability across their supply chains, including the source of raw materials, the production processes carried out in Vietnam, labor conditions at different tiers of suppliers and any links to entities or regions considered high-risk.

Meeting those requirements could require stronger contractual obligations with suppliers, including commitments to provide data, allow audits of relevant records and assume responsibility for inaccurate disclosures.

It is akin to a "compliance passport" for goods, a package of documentation covering origin, inputs, labor conditions, transportation records and other information needed to demonstrate compliance when questions arise.

While such documentation would not shield products from economy-wide tariff measures, it could lower the risk of customs holds, investigations, cancelled orders or demands for price concessions.

The burden may be particularly significant for small and medium-sized enterprises.

To ease compliance costs, government agencies and industry groups could consider providing standardized reporting templates, sector-specific guidance, shared traceability systems and early-warning tools.

As negotiations with Washington continue, the success of any future agreement should be measured by more than the tariff rate ultimately secured.

Equally important will be the transparency of its provisions, the practicality of its obligations, the effectiveness of its review mechanisms and the degree of policy flexibility it preserves.

For Vietnam, the objective extends beyond narrowing a 2.5-percentage-point tariff gap.

It also involves securing clarity over the conditions attached to preferential treatment, the ability to demonstrate compliance and the opportunity to seek a reassessment when circumstances change.