Trump’s Vietnam Trade Deal Is All About China. What That Means for Markets.

A worker stitches apparels at a garment factory in Vietnam’s Thai Nguyen Province. (NHAC NGUYEN/AFP via Getty Images)

Good morning, Vietnam? Well a decent morning perhaps, after a trade deal between the country and the U.S. was announced Wednesday. A glance at the details and it looks like a maneuver to box in China.

A 20% tariff on Vietnamese goods entering the U.S. is better than the threatened 46% duties lined up in April and provides some certainty for companies such as Nike and Lululemon that rely heavily on the country’s production. However, it is still likely to drive up prices for American consumers in the long run.

The deal is unlikely to substantially reduce the U.S. trade deficit with Vietnam, which stood at more than $123 billion last year. While Hanoi is allowing American goods to enter duty-free, it’s hard to imagine that will lead to significant sales of SUVs, an aspiration of President Donald Trump, given the country is still largely dependent on motorcycles rather than cars. The new tariff level also isn’t a high enough penalty to shift clothes manufacturing stateside.

So why should markets care about a deal with Vietnam? It contains a 40% tax applied to goods shipped via Vietnam from third countries—a key measure and one squarely aimed at China. There’s plenty of reason to clamp down on such shipments, with up to 28% of Vietnam’s exports to the U.S. containing “indirect Chinese content,” according to ING.

It’s a reminder that bringing China to the table is the most important prize, for the Trump administration and the stock market. There are positive signs that negotiations are advancing, with Washington also lifting some restrictions on exports of chip-design software to China. However, Beijing warned Thursday it would react badly to attempts by Washington to isolate its economy via trade deals with other countries.

While it’s been a good morning in Vietnam, Washington will be hoping it doesn’t become a bad year in China. The classic war comedy movie starring Robin Williams was a hit, but its planned sequel was canceled—the market will be hoping for a better outcome from the next installment of Trump’s trade talks.

— Adam Clark

The Barron’s Daily will take a break for the holiday and return on Monday.

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Trump Secures Vietnam Trade Deal as Deadline Looms

President Donald Trump unveiled a trade deal with Vietnam as his administration races to secure trade terms with countries from around the world. A pause on the administration’s so-called reciprocal tariffs is due to expire next week, and Trump so far has announced just a couple of deals.

• The U.S. set tariffs on imported goods from Vietnam at 20%, which is less than half the 46% Trump threatened on April 2 before pausing that rate so a trade deal could be negotiated. Trump said Wednesday that Vietnam agreed to take in American goods at a 0% tariff rate.
• The U.S. also set a 40% tariff on any goods that were “transshipped” from Vietnam to the U.S., referring to goods originally from China or other countries and exported from Vietnam. He predicted that American SUVs would be a “wonderful addition” to Vietnam.
• Veda Partners’ Henrietta Treyz said that the agreement showed if anything that higher tariff rates are here to stay. The 20% rate on Vietnamese imports is twice that of the current U.S. tariff that applies to most imports. Vietnam is the U.S.’s eighth largest trading partner.
• A number of retailers make goods in Vietnam and have moved production there from China and elsewhere, including Nike. About 40% of products sold by Lululemon and Crocs are made in Vietnam, and nearly 90% of On Holding’s footwear is made there.

What’s Next: Apple makes MacBooks, iPads, and AirPods in Vietnam, but not most of its iPhones. UBS’s David Vogt says that while Vietnam has been a key region for Apple’s supply-chain investment, its dependence on Vietnam is small relative to its reliance on China, so margins shouldn’t be affected as much.

— Reshma Kapadia, Angela Palumbo, and Janet H. Cho

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Tax Megabill Set for Final Vote After Holdouts Relent

The House of Representatives is expected to hold a final vote on President Donald Trump’s tax and spending bill early Thursday after its progress stalled due to resistance from a handful of Republican lawmakers.

• Five GOP lawmakers voted with Democrats late Wednesday against a procedural “rule” vote, blocking the bill from moving toward final passage for several hours. Several other Republicans opted not to vote.
• House Speaker Mike Johnson (R., La.) told reporters early Thursday that productive discussions had been held with the holdouts, adding that Trump and Vice President JD Vance were also involved. Four of the rebels changed their votes to back the procedural question shortly after 3 a.m. Thursday, The Wall Street Journal reported. Johnson said a final vote could happen Thursday morning.
• Trump also waded in on Truth Social. “FOR REPUBLICANS, THIS SHOULD BE AN EASY YES VOTE. RIDICULOUS!!!” he said in a post just before 1 a.m. Eastern time. The president has set a deadline of Friday for the bill to be on his desk. The Senate narrowly passed the legislation on Tuesday after Vance cast the tiebreaking vote.
• Objections from the holdouts ranged from those who argued the bill increases the federal budget deficit too much to those worried about the cuts to the social safety net.

What’s Next: After marathon sessions in the Senate and now in the House, the finish line finally appears to be in sight for Trump’s signature tax and spending bill, maybe even in time for his self-imposed July 4 deadline.

— Callum Keown

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Tesla Notches Its Worst-Ever Quarterly Delivery Drop

Tesla has managed to turn bad news into a positive. While second-quarter vehicle deliveries dropped more than 13%, representing the worst quarterly decline in the electric vehicle maker’s history, the drop off wasn’t as bad as the most pessimistic analysts feared.

• Tesla delivered 384,122 vehicles, a level that was higher than the first quarter’s deliveries. For bullish analysts like Wedbush Securities’ Dan Ives it was early fireworks. Ives believes Tesla is on a path for accelerated growth, with deliveries expected to climb in the second half of 2025.
• The trends hadn’t been positive. Tesla’s sales in Europe fell about 37% in April and May combined from a year ago. Tesla’s quarterly sales in China, based on weekly numbers tracked by Citi analyst Jeff Chung, dropped more than 10%. Some Chinese buyers avoided buying American-made products amid trade tensions.
• And the sales drops weren’t isolated to Tesla. Rivian’s second-quarter deliveries fell 22.7% compared with the year-ago quarter, to 10,661. Tariffs and interest rates are raising costs, though Rivian maintained its full-year sales guidance. It is relying on sales picking up in the second half.
• Analysts point to Tesla’s other business as helping to make up for weakness in its vehicle business. Tesla also delivered 9.6 gigawatt hours of energy storage in the second quarter, a tick higher than a year ago but down from 10.4 gigawatt hours in the first quarter.

What’s Next: Tesla’s second-quarter earnings report arrives on July 23. Wall Street currently expects earnings of 44 cents a share, according to FactSet, down from 52 cents in the second quarter of 2024. Investors are also waiting for updates on Tesla’s next model and on its robo-taxi rollout.

— Al Root and Janet H. Cho

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Trump Ally Opens New Front in Political Battle Over Powell

Federal Reserve Chair Jerome Powell is facing heightened political scrutiny over the central bank’s $2.5 billion headquarter renovation. The head of the Federal Housing Finance Agency has urged Congress to investigate whether Powell misled lawmakers in answering questions during his semiannual testimony.

• William Pulte, the FHFA director and chairman of Fannie Mae and Freddie Mac, said it may be grounds for Powell’s removal as Fed chair. The Fed didn’t respond to a request for comment. House Judiciary Committee Chair Jim Jordan told Bloomberg Television that lawmakers hadn’t discussed the issue, but will look at it.
• Pulte’s remarks add to growing Republican criticism of the renovation, which has become a political flashpoint as frustration builds over the Fed’s handling of interest rates. The overhaul of the Fed’s 90-year-old Washington headquarters is expected to be completed by 2027.
• Fed officials say the work is needed to address serious infrastructure deficiencies, and Powell defended the project during a June Senate Banking Committee hearing. The price tag has risen from $1.9 billion over the years, and Elon Musk drew attention to it at the Department of Government Efficiency.
• Sen. Cynthia Lummis, a Wyoming Republican, argued after Powell testified that his remarks contradicted the available evidence and raised questions about the Fed’s transparency. Pulte’s statement escalates things to a top Trump official publicly calling on Congress to open a formal investigation.

What’s Next: Pulte framed the renovation as part of a larger management failure at the Fed. The fight over the Fed’s renovation represents a new front in the political battle over Powell’s tenure and the bank’s policies. Late Wednesday, President Trump posted on social media calling for Powell to resign immediately.

— Nicole Goodkind and Liz Moyer

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It’s Not ‘Barbenheimer,’ But 2025’s Summer Box Office Sizzles

While Hollywood lacks a clear Barbenheimer one-two punch at the box office this summer, ticket sales may play a starring role. The big movies slated for this summer are expected to generate more than $4 billion in revenue—a level not seen since 2023, according to Comscore data.

• From the first Friday of May through Labor Day, U.S. and Canada domestically account for nearly 40% of the entire year in box office revenue, says Comscore’s Paul Dergarabedian. It’s a key driver of revenue. Last week’s debut of Apple’s F1 the Movie may have set the tone.
• Comcast’s Universal is debuting Jurassic World Rebirth for the long holiday weekend. Other notable films lined up for this month include Superman from Warner Bros. Discovery, and The Fantastic Four: First Steps from Walt Disney’s Marvel Studios.
• While sequels and franchises have led the box office in recent months and feature in movies slated for this summer, there have been some casualties. How To Train Your Dragon was a juggernaut while Pixar’s Elio flopped. Horror movie M3gan 2.0 fell short of expectations on its opening weekend.
• Streaming platforms are becoming more intertwined with theaters, as F1’s theatrical release shows. The cinematic debut boosted its marketing and propelled buzz ahead of the movie’s release on Apple TV+. Netflix has a deal with director Greta Gerwig to release her Chronicles of Narnia on IMAX next year.

What’s Next: Two things could really drive people to movie theaters this summer: word-of-mouth and social media. Fans of A Minecraft Movie began throwing popcorn and flashing phone lights during a popular scene, catapulting a viral online trend by teenage audiences.

— Mariapaula Gonzalez

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The stock market shrugged off the U.S. bombing of Iran, the continuing global trade war and a Wall Street adage advising investors to “sell in May and go away”—and ended June near record territory.

There are a few things that could push this rally further, but there are also risks that investors should be aware of. MarketWatch asked around for answers.

For more on this, read here.

— Gordon Gottsegen

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner