Trade, agriculture and sustainability policy in Vietnam and Southeast Asia, read from the primary sources. Biweekly.
The Fortnight in Brief
Vietnam's seven-month trade deficit reached $20.52 billion on exports of $319.53 billion and imports of $340.05 billion, past the $18.03 billion full-year record set in 2008, with July alone contributing $3.59 billion. Composition carries the explanation: computers, electronics and components reached $135.8 billion, up 65.9%, most of the roughly $88 billion rise in total imports. Production inputs of every kind made up 94.1% of the bill.
USTR's forced-labor tariff, in force since July 24, sorts economies through a three-part test. An economy pays 10% if it prohibits forced-labor imports, if it has committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or if it runs a partial regime with that effect. Malaysia qualified on a commitment in an agreement signed in October 2025, Cambodia on that plus a prohibition it adopted in July; Indonesia appears in the June 5 proposed action on both grounds, holding an agreement and having enacted its own prohibition in April. Vietnam met none of the three when rates were proposed. It signed its own prohibition into law on July 22, two days before the duty began, to take effect September 5. USTR neither credited it nor explained why. Vietnam and Thailand pay 12.5%.
Textiles carry the gap furthest. Vietnam's US apparel trade, $17.03 billion in 2025 and the largest of any single supplier, has no path into the tariff-rate quotas the Memorandum of July 23 directs USTR to build for Bangladesh, Cambodia, Indonesia and Malaysia. The quotas do not exist yet, and until USTR establishes them those four pay 10% on the same goods. Once they arrive, covered volumes enter free of the duty.
Rice volume fell hard: July exports dropped 38.8% to 481,000 tonnes on the Statistics Office's count, against 505,000 on the agriculture ministry's. The widely repeated year-to-date figure alongside them is measuring a third thing, which Market Signals takes apart.
Policy Watch: Vietnam's deficit runs on electronics, and its tariff on an agreement it never signed.
What $340 billion of imports actually bought
Electronics did the work. Seven-month imports reached $340.05 billion against exports of $319.53 billion, up 34.8% and 21.7%. Computers, electronics and components alone reached $135.8 billion, up 65.9%, an increase of roughly $54 billion against a total import rise of about $88 billion. Machinery grew 22.7% to $41.07 billion, slower than imports overall, so it diluted the deficit rather than driving it. Production inputs accounted for 94.1% of imports; consumer goods, 5.9%. An economy importing at that ratio is buying capacity.
The cautious reading comes from inside the government. NSO Director General Nguyễn Thị Hương attributed roughly $8 billion of the January-to-May gap to petroleum and warned that a deficit generally weighs on economic performance. HSC's Phạm Vũ Thăng Long offers a third reading: semiconductor shortages pushing firms to build inventory, which would make part of the electronics surge a stockpiling artifact. All three fit the same data. At a 94.1% input share the investment reading is likeliest, and it remains a reading.
Two documents, two rates: what was and wasn’t signed in Kuala Lumpur
Kuala Lumpur, October 26, 2025. Cambodia and Malaysia each signed an Agreement on Reciprocal Trade with the United States, both published on USTR's agreements page. Vietnam and Thailand issued joint statements that month about frameworks for agreements they have not concluded, and neither appears there. Thailand's says more about labor than Vietnam's, committing it to amend its freedom-of-association law and enforce labor law "in sectors with a high risk for forced labor and child labor." What neither commits to is prohibiting the importation of forced-labor goods, the only thing the criterion counts. USTR's July fact sheet is plain: partners "that have made commitments to adopt, and effectively enforce, forced labor import prohibitions will have a 10% tariff, and trading partners that have failed to adopt a forced labor import prohibition will have a 12.5% tariff rate."
Section 301 is carrying this because the alternative was removed: the Supreme Court invalidated the IEEPA tariffs on February 20 in Learning Resources v. Trump and did not reach Sections 232, 301 or 122, which remain available.
What I'd tell a client this week: the number to model is 2.5, not 12.5. Section 122's 10% surcharge hit its 150-day statutory limit and expired at the same hour the Section 301 duty began, so Vietnam's own landed cost moved 2.5 points on July 24. Keep that separate from the other 2.5 in this issue, which is the competitive gap against Cambodia, Indonesia and Malaysia and bites only where those economies actually compete. Apparel is where they do. Section 232 goods sit outside the duty altogether -- steel, aluminum, copper and derivatives, vehicles and parts, wood products, semiconductors -- which narrows exposure further than most client alerts have suggested, though the duty does stack with MFN and leaves AD/CVD intact. And the regional comparison is narrower than the headlines imply: Thailand, the Philippines and Singapore all sit at 12.5% alongside Vietnam.
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