Unilateral tariffs and legal adaptation: The Vietnam – U.S. trade deal in fragmented trade governance

Abstract

Tariffs have re-emerged as strategic instruments of economic statecraft, reflecting a shift in global trade governance where power and security increasingly shape market relations. The 2025 Vietnam–U.S. tariff deal exemplifies this transformation: introduced under the International Emergency Economic Powers Act (IEEPA), it marked the first time emergency powers were used to impose unilateral, partner-specific tariffs outside traditional sanctions. While protectionism and WTO paralysis have been widely studied, little attention has been given to how unilateral tariff measures reshape global value chains and generate legal and institutional forms of adaptation. This paper fills that gap by examining the Vietnam–U.S. tariff episode as a model for understanding how unilateral tariffs trigger legal and institutional adaptation across multiple levels in the emerging trade order. Using a qualitative legal and policy analysis, the study assesses the legal foundation of the IEEPA-based tariff regime, its WTO compatibility, and Vietnam’s adaptive measures in regulatory transparency, industrial localisation, and contractual adjustment. The analysis finds that transhipment disputes expose the fragility of non-harmonised rules of origin, retaliation has shifted from collective, rule-based enforcement to unilateral discretion, and innovation emerges as one mechanism within broader processes of legal and institutional adaptation for sustaining participation in global markets. The paper concludes that when formal trade enforcement collapses, smaller economies can maintain credibility and bargaining power not through retaliation, but by enhancing transparency, clarifying origin rules, and embedding flexibility in trade and investment contracts, thereby turning compliance into a strategic form of adaptation.