Strategic Alignment in a Fragmenting Trade Order
by Juan Inoriza
Author: Juan Inoriza Date: 9 July 2025
Abstract
In an increasingly polarised global trading environment, Vietnam and the United Kingdom have emerged as the only two nations to have formally concluded bilateral tariff agreements with the Trump administration in the United States. This article examines the contours, concessions, and geopolitical implications of these deals, with a particular focus on Vietnam’s strategic positioning amid intensifying global tariff threats. As a 10 July deadline looms for other countries to sign comparable deals or face punitive tariffs, the article explores the motivations behind these agreements, their divergence in structure, and the broader impact on transregional trade relations and diplomatic alignments, especially in light of pressure on BRICS members and the European Union’s unresolved trade position.
1. Introduction
The global trade landscape has entered a new phase of fragmentation and conditional bilateralism, particularly following the reintroduction of aggressive tariff policies by the Trump administration. Amongst widespread diplomatic resistance and hesitation, only two sovereign nations—Vietnam and the United Kingdom—have opted to sign bespoke tariff frameworks with Washington, effectively securing temporary exemptions from sweeping duties announced on so-called “Liberation Day” (2 April 2025). This study offers an analytical comparison of the two agreements and explores their anticipated economic and geopolitical consequences, particularly in light of tomorrow’s ultimatum (10 July 2025) for other nations to join or be penalised.
2. Vietnam’s Agreement with the United States: Contours and Commitments
On 2 July 2025, Vietnam finalised a comprehensive tariff deal with the United States. At its core, the agreement institutes a flat 20% tariff on Vietnamese exports to the U.S., a significant reduction from the previously announced 46% punitive rate. Moreover, the deal introduces a 40% tariff on goods deemed to be transshipped through Vietnam, particularly in response to concerns over Chinese-origin products circumventing U.S. tariffs via Vietnamese ports.
In exchange, Vietnam has agreed to remove tariffs on American goods progressively and to intensify enforcement measures against transshipment activities. The agreement also includes provisions for enhanced customs cooperation, joint digital tracing mechanisms, and a biannual audit process to ensure compliance.
Strategically, the deal enables Vietnam to preserve a degree of preferential access to its largest non-ASEAN export destination, protecting vital sectors such as textiles, electronics, and seafood. However, it also complicates Hanoi’s delicate diplomatic balancing act with Beijing, which has responded with thinly veiled threats regarding economic retaliation if Vietnam is perceived as a conduit for U.S. decoupling from Chinese supply chains.
3. The United Kingdom’s Sectoral Agreement: A Targeted Approach
In contrast to Vietnam’s broader framework, the United Kingdom’s agreement—signed in early June 2025—focuses on sector-specific relief and conditional market access. British exporters of steel and aluminium, who were facing an imminent escalation to 50% tariffs, will now see a maintained 25% rate. In the automotive sector, the agreement introduces an annual quota allowing up to 100,000 UK-manufactured vehicles into the U.S. at a 10% tariff, significantly below the standard 25% rate.
Additional elements include tariff-free entry for U.S.-produced aerospace engines and agricultural goods such as beef and soy. In return, the UK has committed to stringent compliance with U.S. supply-chain security requirements, including disclosure protocols for third-country components in vehicles and electronics.
While the UK deal is more limited in scope, it offers strategic advantages in critical sectors and reflects London’s post-Brexit imperative to maintain distinct bilateral economic partnerships. It also signals a continued realignment away from multilateral EU mechanisms, further complicating Brussels’ negotiating position.
4. Comparative Analysis: Convergence and Divergence
| Criterion | Vietnam | United Kingdom |
| Tariff Scope | Flat 20% (general); 40% (transshipment) | Sectoral (25% metals; 10% autos under quota) |
| Concessions | Tariff reductions on U.S. imports; anti-transhipment cooperation | Compliance with U.S. supply-chain security; market access for U.S. goods |
| Strategic Impact | Secures U.S. market access; risks tensions with China | Shields’ key industries support bilateralism post-Brexit |
| Depth of Alignment | Structural, customs enforcement collaboration | Transactional, industry-specific relief |
The Vietnamese deal represents a systemic alignment of trade and enforcement policy, effectively subordinating key customs functions to bilateral oversight. In contrast, the UK approach is transactional and industry-focused, securing relief for politically sensitive sectors while maintaining flexibility in broader trade posture.
5. Liberation Day Tariffs and the 10 July Ultimatum
The Trump administration’s Liberation Day tariffs, initially unveiled on 2 April 2025, aimed to impose punitive duties of up to 46% on non-compliant trading partners. A 90-day suspension period, later extended to 10 July, provided a window for countries to sign bilateral deals. Failure to sign by 10 July would trigger automatic implementation of the announced tariffs on 1 August 2025.
As of this writing, no additional countries have finalised agreements. Multiple governments, including those of Canada, Germany, South Korea, and Brazil, have publicly decried the framework as coercive and incompatible with WTO norms. Nonetheless, USTR letters delivered over the past week confirm the administration’s intention to proceed unless bilateral pacts are reached imminently.
6. EU’s Position: Awaiting a Deal That May Never Arrive
The European Commission continues to await a formal trade proposal from the U.S., having received only preliminary communications outlining Washington’s expectations. Despite multiple rounds of preparatory dialogue, no formal agreement or text has yet been shared. Brussels remains wary of setting a precedent for bilateralism that could undermine the EU’s collective bargaining strategy.
Meanwhile, France and Spain have advocated retaliatory measures should U.S. tariffs proceed without negotiation. The EU thus finds itself trapped between preserving institutional cohesion and protecting member state exports, particularly in the automotive, aerospace, and luxury goods sectors.
7. Threats Against BRICS-Aligned Nations
In a separate but related escalation, the Trump administration has warned that countries moving toward alignment with the BRICS bloc may face additional tariffs of 10% above baseline rates. The measure, intended to dissuade emerging economies from deepening ties with China and Russia, further complicates the geopolitical calculus for middle-income states such as South Africa, Indonesia, and Argentina.
The warning arrives amid a flurry of diplomatic exchanges between BRICS members and ASEAN states, raising concerns that Washington’s tariff diplomacy may catalyse the very multipolar alignment it seeks to prevent.
8. Conclusion: Vietnam’s Calculated Gamble
Vietnam’s decision to engage in a structural tariff agreement with the United States positions it as a unique actor in the current trade reconfiguration. While the immediate benefit of continued market access is substantial, the long-term implications—including regulatory entanglement and diplomatic fallout with China—remain uncertain.
The UK, for its part, has pragmatically insulated itself from specific tariff shocks, though its overall exposure to a fragmenting trade system persists. As the 10 July deadline approaches, the failure of other nations to join the framework may result in widespread trade disruptions and potentially a new phase of retaliatory protectionism.
Whether Vietnam’s gamble will be seen as visionary or reckless may depend less on the economic data and more on the evolving architecture of global trade governance in the years to come.
References
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