Vietnam's New European Trade Deal Just Put Latin America's Textile and Electronics Sectors on Defense

Vietnam's President To Lam (C), Liechtenstein's Prime Minister Brigitte Haas (L) and Switzerland's President Guy Parmelin (R) pose during the signing ceremony for the Vietnam-EFTA Free Trade Agreement (VEFTA) in Hanoi on October 18, 2026. Vietnam and four European nations that are not EU members signed a free trade agreement in Hanoi on October 18, with the parties seeking to diversify their markets as US tariffs disrupt global commerce. (Credit: Photo by Nhac NGUYEN / AFP via Getty Images)

The Briefing

• Vietnam signed a landmark free trade agreement with the four-nation EFTA bloc on October 18, securing immediate zero-tariff access for 99.5% of its exports across Norway, Switzerland, Iceland, and Liechtenstein — goods that directly compete with Latin American products in those same markets.
• A parallel Vietnam–Mercosur preferential trade negotiation, whose first round concluded in Buenos Aires in August, brings the competitive challenge directly into South America's home territory.
• President and General Secretary Tô Lâm personally attended the Hanoi signing ceremony, underscoring the deal's strategic priority as Vietnam moves to reduce dependence on U.S. markets, where a 12.5% tariff on Vietnamese textile goods exceeds the 10% rate applied to some regional rivals.