UPDATE: Vietnam to cut import tariffs on US products by end-March

SINGAPORE (ICIS)–Vietnam will cut import tariffs by at least half on US products such as ethanol, liquefied natural gas (LNG) and automobiles, while bringing the levy on ethane down to zero, by the end of the month.

Tariffs on ethanol will be cut to 5% from 10%; while those for LNG will be reduced to 2% from 5%; and those on cars will be shaved to 32%, half of the high-end of the 45% to 64% tariff range currently in effect, Vietnam’s Ministry of Finance stated on 25 March.

The announcement was made by tax policy department head Nguyen Quoc Hung.

Vietnam, which is a major manufacturing hub in Asia, has the third-biggest trade surplus with the US after China and Mexico.

US President Donald Trump has imposed tariffs on China and Mexico in February and March, respectively, a few months after taking office.

The US is Vietnam’s largest export market.

Data from the US Trade Representative (USTR) showed that the US’ trade deficit in goods with export-reliant Vietnam last year reached $123.5 billion, up by more than 18% from 2023.

US’ imports from Vietnam totaled $136.6 billion against its exports of $13.1 billion to the southeast Asian country, according to USTR data.

Vietnam’s tariff cuts are aimed at “improving trade balances with [its] trade partners”, Hung said, adding that despite the Comprehensive Strategic Partnership between the US and Vietnam, the two nations have not yet established a free-trade agreement (FTA).

Hung said the decree on the tariff cuts will be ready by the end of March and will take effect right after.

Cuts on import tariffs will also apply on goods such as chicken thighs, almonds, apples, cherries, and wooden product.

Trump is scheduled to apply reciprocal tariffs on multiple nations from 2 April, with some possible exceptions.

Vietnamese-US cooperation, procurement, and trade agreements were signed during the US work trip by Vietnam trade and industry minister Nguyen Hong Dien in mid-March, according to Vietnam state media.

PetroVietnam Gas Corp (PVGas) has signed a memoranda of understanding (MoUs) on long-term LNG supply with US energy majors ConocoPhillips and Excelerate.

Meanwhile, Vietnam’s Binh Son Refining and Petrochemical Company (BSR) has partnered with US engineering and construction solutions firm Kellogg Brown & Root (KBR) for a sustainable aviation fuel (SAF) pre-feasibility study.

Starting in 2025, Vietnamese and US business cooperation agreements are anticipated to reach $90.3 billion, according to the Vietnam News Agency (VNA).

This includes $4.15 billion in agreements already signed; $50.15 billion for aviation and energy sector deals; and $36 billion in agreements expected to be finalized soon.

Thailand’s Siam Cement Group (SCG) is currently paving the way for Vietnam’s first integrated petrochemical complex to use US ethane as feedstock for production.

The project, which will mean increased feedstock diversification for its wholly owned Vietnamese subsidiary Long Son Petrochemicals (LSP), is expected to be completed by the end of 2027.

Operations at the LSP complex in Ba Ria-Vung Tao province in southeastern Vietnam remains shut after it was halted indefinitely from mid-October 2024 amid poor production economics.

(adds details throughout)

Visit the US tariffs, policy – impact on chemicals and energy topic page

Thumbnail image: At the Hai Phong Port in Hai Phong Vietnam on 25 May 2015 (Minh Hoang/EPA/Shutterstock)