HCMC – The Ministry of Finance is seeking to lower Most Favored Nation (MFN) import tariffs on a range of goods, including automobiles, liquefied natural gas (LNG), and wooden products.
Nguyen Quoc Hung, director of the Tax Policy Management Department under the Ministry of Finance, confirmed the proposal during an interview with the Vietnam News Agency on March 25. The ministry is currently collecting feedback on draft amendments to Decree 26/2023/ND-CP, which outlines Vietnam’s MFN tariff schedule.
The proposed tariff reductions would see MFN tariffs on certain types of cars fall from 45-64% to 32%. The import tax on LNG would be reduced from 5% to 2%, while ethane would be exempted entirely.
Wood and wood products would see tariffs drop from 20-25% to 5%. Ethanol would be taxed at 5% instead of the current 10%. Other agricultural products such as frozen chicken thighs, pistachios, almonds, fresh apples, cherries, and raisins would also face lower MFN tariffs, mostly reduced to around 5%.
MFN tariffs are applied to goods imported from member countries of the World Trade Organization (WTO) unless more favorable terms are granted under separate trade agreements. These proposed adjustments are expected to benefit imports from countries like the U.S. which do not have a free trade agreement (FTA) with Vietnam.
Vietnam currently maintains comprehensive strategic partnerships with 12 countries, including the U.S., Japan, South Korea, India, China, Australia, and several Southeast Asian nations. Among these, 11 partners already have bilateral or multilateral trade agreements with Vietnam, giving them preferential access to the Vietnamese market.
The U.S., despite having signed a bilateral trade agreement with Vietnam in 2001, has not entered into an FTA, and therefore U.S. exports are subject to standard MFN tariffs.
The Ministry of Finance said that it is necessary to reduce MFN tariffs to ensure equal treatment among Vietnam’s strategic partners. The measure is also intended to help Vietnam respond more flexibly to global economic shifts, support economic growth, stabilize macroeconomic conditions, and control inflation.
The ministry added that adjusting import tariffs will improve the trade balance, encourage businesses to diversify sources of imported goods, and boost domestic consumption. Tariff reductions will apply only to products that are not made locally. For goods with high import volumes, authorities will carefully evaluate any changes to ensure the MFN rate remains above those offered in Vietnam’s existing FTAs.
