The United States and Vietnam agreed to start talks for a trade agreement, the Vietnamese government said on Thursday, hours after the U.S. paused the implementation of global "reciprocal" tariffs, including a 46% levy on Vietnam.

The tariffs will hack at the root of Vietnam’s export-oriented economic model. In recent years its economy has benefited from manufacturers diversifying away from China, growing by an average of 7% a year over the past decade (excluding the pandemic).