Trump Says He’s Struck a Trade Deal With Vietnam

President Donald Trump said Wednesday morning that he has struck a third trade agreement, a week before his self-imposed 90-day negotiation deadline expires.

In a social media post, Trump said that Vietnam has agreed to pay a 20% tariff on goods shipped to the United States and 40% on items that are shipped from other countries to Vietnam, and then sent to the U.S.

“It will be a Great Deal of Cooperation between our two Countries [sic],” Trump wrote.

The deal is important to Vietnam, which otherwise would have faced a 46% tariff starting on July 9. It’s also consequential on a global scale, because some companies produce goods in other countries and then ship them to Vietnam before sending them on to the U.S. in order to evade import taxes.

The deal could also be critical for U.S. companies like Nike (NKE). A number of apparel and footwear manufacturers have moved their supply chains to Vietnam and other countries in the region. These companies relocated production out of China to avoid the contentious trade relationship it has with the U.S.

Nike sources 50% of its shoes and 28% of its apparel from Vietnam, according to its most recent annual report. Shares of the company were up nearly 3% on the day. The S&P 500 also jumped in the wake of Trump’s announcement, pulling out of the morning’s decline.

Vietnam is the second country to reach a trade agreement with the U.S. during Trump’s 90-day pause on “reciprocal” tariffs. If countries subject to Trump’s most extreme tariffs do not reach a deal by the time the pause expires on July 9, high import taxes are scheduled to kick back in for at least 38 countries.

Over the past two weeks, White House officials have said the deadline could be extended for countries negotiating in ‘good faith.’ India and the European Union are the only entities currently known to be in talks with administration officials to hammer out an agreement.

The United Kingdom was the first country to reach a trade agreement with the U.S.; however, it was never subject to tariffs above the 10% baseline that was implemented in April. Chinese and American officials have also agreed to a trade framework, but discussions between the two countries appear to be ongoing.