The Donald Trump administration has paused reciprocal tariffs for 90 days. Still, this move does not alter the U.S. objective of narrowing its trade deficits with other trade partners worldwide. For countries with large trade surpluses with the U.S. like Vietnam, the tariffs will limit the flexibility of future monetary policy decisions. A rapidly changing landscape On April 2, 2025, President Donald Trump announced sweeping reciprocal tariffs on imports from most of America’s trading partners. The policy involves two phases: a baseline 10% tariff on all countries starting April 5, 2025, followed by additional tariffs based on the trade surplus ratio, effective April 9, 2025. Vietnam is among the countries facing extremely high tariffs, with a 46% rate. However, when the second phase was set to take effect on April 9, Trump unexpectedly announced a 90-day pause for 75 countries that had not retaliated against the U.S., excluding China, which saw tariffs for its goods shipped to America rise to 125%. Later, on April 12, 2025, the U.S. government declared exemptions for goods such as smartphones, computers, and electronic components—products largely assembled in China, Vietnam, India, and Taiwan. These items may be subject to a separate sector-specific tax regime. Despite […]