Vietnam Now Has the Largest US Trade Gap at $114 Billion, Ahead of China

Vietnam has overtaken China as the country running the largest goods trade surplus with the United States, and it is trying to close a tariff deal before that becomes a bigger problem.

Vietnam posted the largest trade gap with the US in the first half of 2026 at $114 billion, ahead of China, Mexico and Taiwan, according to Bloomberg. Its imports from China have surged over the same period as manufacturers ramp up production of goods for export, including electronics destined for American consumers.

Those two facts sit at the centre of the negotiation.

Deputy Prime Minister Nguyen Van Thang met US Trade Representative Jamieson Greer in Washington during a working visit on 27 and 28 August, reiterating Vietnam's readiness for open and constructive trade talks as the two sides seek to complete a tariff deal following a framework agreement reached in October. Greer told Thang the US wants to conclude negotiations soon on the reciprocal trade agreement, according to a statement on Vietnam's government website.

Thang signalled Hanoi's willingness to ease US concerns over trade fraud and the illegal routing of exports through the country.

Transshipment is the substantive dispute

That last point is the hardest issue in the talks, and Washington has put a number on it.

The United States said this month it is losing an estimated $19 billion to $26 billion in annual tariff revenue on goods — largely from China — that are transshipped through third countries including Vietnam to avoid US import duties.

Vietnam's response has been to engage rather than dispute. Foreign Ministry spokesperson Pham Thu Hang said Hanoi would continue dialogue on the US concern in a constructive manner and consistent with the Vietnam-US Comprehensive Strategic Partnership, adding that this would help sustain stable, mutually beneficial trade growth and contribute to a transparent investment and business environment in Vietnam.

The difficulty is structural rather than diplomatic. Vietnamese manufacturers legitimately import Chinese components, assemble them and export finished goods — that is what a supply chain is. Distinguishing that from goods merely passing through to evade duties requires rules of origin enforcement, and the surge in Chinese imports makes the distinction harder to police at exactly the moment Washington is scrutinising it.

What is at stake

US tariffs on Vietnamese goods currently stand at 20%, reduced from an initial 46% under an executive order last year.

Vietnam is among the world's most trade-dependent economies, with a trade-to-GDP ratio approaching 170%, so tariff outcomes reach the whole economy rather than a sector of it. The country grew 8.39% year on year in the second quarter, with imports rising 26.44% against export growth of 20.18%.

Thang used the Washington visit to court investment as well, meeting representatives of Qualcomm, Visa, Axon Enterprise and Caterpillar.

What to watch

Whether the deal concludes is the immediate question. A framework agreed in October and still unfinished in late August suggests the remaining issues are substantive rather than procedural.

The second is transshipment enforcement. Any agreement will likely require Vietnamese commitments on rules of origin, and implementation will be scrutinised.

The third is the trade gap itself. At $114 billion in six months and rising, the surplus is the underlying reason Vietnam is negotiating from a difficult position — and its own growth model, which imports components to export finished goods, is what produces it.