On the evening of July 2nd, former US President Donald Trump took to the Truth Social media platform to announce a trade agreement with Vietnam. According to the post, Vietnamese exports to the US will be taxed at 20%, while transshipped goods will face a 40% tax rate. In return, American imports into Vietnam will be tax-exempt.
The former President specifically mentioned automobiles, stating: “I believe that SUVs or ‘large engine vehicles’, which have been very successful in the US, would be a fantastic addition to Vietnam’s diverse automotive market.”
Mr. Trump’s post immediately sparked hopes among car enthusiasts of being able to purchase imported American cars at much lower prices than currently available. So, if the import tax on automobiles from the US is eliminated, how will the prices of imported cars change?
Which car models in Vietnam are imported from the US?
The Vietnamese automobile market currently offers a wide range of SUV models imported directly from the US, including the Ford Explorer, which is the only Ford model imported to Vietnam from the US. Mercedes-Benz also imports several models from the US, such as the GLE, GLS, the new Maybach GLS 600 facelift, and electric vehicles like the EQE and EQS. Additionally, Jeep offers a range of large vehicles, such as the Gladiator, Wrangler, Grand Cherokee L, and Ram 1500. These models would be the first to benefit from a potential reduction in import taxes from the US.
The Mercedes-Benz GLS 450 4Matic, imported from the USA
During a brief Q&A session with Mercedes-Benz Vietnam’s leadership at the Mercedes-Benz LiveRARE exhibition in Ho Chi Minh City on July 3rd, some interesting information was revealed.
Mercedes-Benz Vietnam representatives stated that while they assemble the C-Class, GLC, E-Class, and C43 models in the country, they also import vehicles from Europe and the US. Their US imports mainly consist of large-cylinder vehicles, currently subject to MFN taxes—the preferential import tax rates that Vietnam applies to imports from WTO member countries or nations with which it has signed trade agreements. The current import tax rates for automobiles from the US (as of March 1st, 2025) vary based on engine capacity:
– For engines up to 2,000 cc, the import tax is 70%
– For engines between 2,000 cc and 2,500 cc, the import tax is 50%
– For engines above 3,000 cc, the import tax is 32%
– Electric vehicles are taxed at 70% on import.
MBV’s imports from Europe are subject to EV FTA taxes, currently at nearly 40% and gradually decreasing over the years.
Mercedes-Benz Vietnam’s General Director, Mr. Gerd Bitterlich, expressed his positive outlook on the potential reduction of import taxes on US automobiles, stating that it would positively impact imported American cars.
In informal conversations, several sales directors from Mercedes-Benz dealerships estimated that a mechanical calculation showed MBV imports from the US could decrease in price by 15 to 20% if the import tax were eliminated, assuming no other cost factors changed.
Comparing Import Prices Before and After the Potential Tax Exemption
Specifically, let’s consider a hypothetical US-imported vehicle with a 4-liter engine and a CIF price of $100,000. This vehicle would be subject to a special consumption tax of 90% upon entering Vietnam. Here’s how the taxes break down:
– Import tax (32%): $100,000 x 32% = $32,000
– Price after import tax = $100,000 + $32,000 = $132,000
– Special consumption tax (90%, calculated on the price after import tax): $132,000 x 90% = $118,800
– VAT = (CIF value + Import tax + Special consumption tax) x 10% = ($100,000 + $32,000 + $118,800) x 10% = $25,080
Total taxes payable = Import tax + Special consumption tax + VAT = $32,000 + $118,800 + $25,080 = $175,880
Price of the vehicle upon import to Vietnam (excluding other costs): $100,000 + $175,880 = $275,880
Now, let’s assume the import tax is reduced to 0%. The taxes would then be as follows:
– Import tax (0%) = $0
– Price after import tax = $100,000
– Special consumption tax (90%, calculated on the price after import tax): $100,000 x 90% = $90,000
– VAT (10%) = (CIF value + Import tax + Special consumption tax) x 10% = $190,000 x 10% = $19,000
Total taxes payable = $0 + $90,000 + $19,000 = $109,000
Price of the vehicle upon import to Vietnam (excluding other costs): $100,000 + $109,000 = $209,000
Thus, the cost of importing this vehicle to Vietnam could decrease by $66,880, from $275,880 to $209,000, representing a 24% reduction. This theoretical analysis highlights the potential significant impact of eliminating import taxes on US automobiles. While this may positively influence consumers’ car-buying decisions, experts also caution that buyers may opt to delay purchases, anticipating further price drops.
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