The Vietnamese Agriculture Ministry announced on Tuesday that domestic companies plan to sign memorandums of understanding with US partners to purchase $2 billion in American agricultural goods, according to a Reuters report.
This initiative is aimed at advancing a new trade agreement between Vietnam and the US.
US President Donald Trump’s administration had imposed substantial “reciprocal” tariffs on Vietnam, reaching a significant 46%.
This measure has introduced considerable uncertainty into Vietnam’s economic outlook.
While these tariffs are currently suspended until July, their potential activation presents a serious threat to Vietnam’s established growth model.
This model is heavily dependent on exports, particularly to the US, which remains Vietnam’s primary and most crucial export market.
The reimplementation of these tariffs could severely disrupt trade flows and negatively impact Vietnam‘s economic performance.
The situation highlights the vulnerability of export-oriented economies to shifts in international trade policies and the potential consequences of trade disputes between major economic powers.
New deals
During a recent diplomatic visit to the United States, a high-powered Vietnamese delegation, consisting of 50 prominent companies and spearheaded by agriculture minister Do Duc Duy, solidified several new trade agreements aimed at bolstering economic ties between the two nations.
A key highlight of this visit was the signing of five Memorandums of Understanding (MoUs).
These MoUs specifically pertain to the procurement of agricultural products from the state of Iowa.
As per the directives outlined in these agreements, Vietnam has committed to purchasing a substantial $800 million worth of goods from Iowa over the span of the next three years.
The visit itself served as a platform for Vietnamese businesses to engage directly with their American counterparts, fostering collaboration and paving the way for future cooperation across various sectors.
According to the report, memoranda of understanding with Iowa encompass acquisitions of corn, wheat, dried distillers grains, and soybean meal.
Trade deficit
Recent discussions between Vietnam and the Trump administration have centered on establishing a mutually agreeable trade framework, driven by the substantial trade imbalance favoring Vietnam.
As part of these ongoing negotiations, Vietnam has committed to increasing its intake of goods originating from the US.
This pledge is a direct response to the persistent and widening trade gap that has become a key point of contention.
The scale of this deficit is notable; in the preceding year, the US recorded a staggering trade shortfall of $123 billion in its economic exchanges with Vietnam.
Other measures
This deficit underscores the urgency and importance of finding a balanced solution through these trade talks, aiming to ensure a more equitable flow of goods between the two nations.
Last year, Vietnam imported $3.4 billion in agricultural goods from the US, while exporting $13.68 billion worth of its own agricultural products to America, according to the Vietnam News Agency.
Vietnam has committed to purchasing additional American goods, such as Boeing aircraft and liquefied natural gas.
Moreover, following US allegations of Vietnam being a significant center for counterfeit goods and digital piracy, the nation has vowed to take action against these illegal operations.
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