U.S. designates Vietnam a top IP threat, Section 301 possible

The U.S. Trade Representative has designated Vietnam a “Priority Foreign Country” for intellectual property violations in the 2026 Special 301 Report, opening a 30-day window to decide whether to launch a formal Section 301 trade investigation. The European Union was added to the USTR watchlist for the first time.

The “Priority Foreign Country” label is reserved for trading partners whose IP practices the USTR finds to have the most severe adverse effects on U.S. products and where good-faith negotiations have not resolved concerns. The designation allows the agency to seek consultations with Vietnamese authorities and, if consultations do not resolve the issues, to initiate a Section 301 probe. The Section 301 mechanism was used to impose tariffs on China beginning in 2018.

U.S. officials cited a sharp rise in Vietnamese exports to the United States as context for the designation. Exports from Vietnam to the U.S. totaled $153 billion in 2025, producing a trade surplus of nearly $134 billion that year. Vietnam’s economy grew about 8% in 2025. The country has become an assembly hub for multinational companies including Apple, Samsung and Nike, often using components sourced from China. U.S. trade officials have accused Vietnam of serving as a transshipment point for Chinese-made goods headed to American consumers.

If the USTR opens a Section 301 investigation within 30 days, the agency will request consultations with Hanoi aimed at resolving the IP concerns. A formal investigation could lead to remedies such as tariffs or other trade measures if the U.S. determines that Vietnam’s practices unfairly harm American industries.

The 2026 report also updated other listings. China remains on the “priority watch list,” one tier below the Priority Foreign Country designation. The priority list includes Chile, China, India, Indonesia, Russia and Venezuela. Nineteen trading partners, including the European Union, occupy the standard watch list. Bulgaria was removed from the report entirely.

The report highlights intellectual property concerns in the context of artificial intelligence. In congressional testimony earlier this year, OpenAI reported that a Chinese startup used methods to extract results from U.S. models. U.S. technology firms have been sharing information through industry forums to detect unauthorized replication or distillation of models.

Vietnam’s economy has been driven by export-led manufacturing and foreign direct investment in factories that assemble goods for global brands. The USTR designation triggers a formal process that could include consultations, negotiations and potential trade remedies. The agency will announce within 30 days whether it will proceed with consultations and a Section 301 investigation.