What Is MFN Tariff? 

MFN Tariff Definition

MFN (Most Favored Nation) tariff refers to the preferential import duty rate that one World Trade Organization (WTO) member grants to another. Despite the name, MFN is not necessarily the lowest rate available, but rather the standard rate given to all WTO members under normal trade relations.

In cases where a Free Trade Agreement (FTA) exists, countries may offer even lower duty rates than MFN to their FTA partners. Therefore, MFN is considered the default preferential rate in the absence of an FTA.

>> Read More: What is EVFTA? The EU-Vietnam Free Trade Agreement Explained

Is the MFN Tariff Always Lower?

The MFN rate is a standard import duty percentage applied to each specific HS code under WTO agreements. It serves as the baseline rate in Vietnam’s import tariff schedule for countries with normal trade relations.

However, MFN is not always the lowest possible rate. When a valid Certificate of Origin (C/O) under an FTA is provided, businesses may qualify for preferential FTA duty rates, which are often lower than MFN. Hence, comparing MFN and FTA tariffs is crucial for cost-effective sourcing.

When Can Businesses Apply the MFN Tariff?

A company is eligible to apply MFN tariff rates when importing goods from a WTO member country that maintains normal trade relations with Vietnam. If no FTA C/O is presented, the MFN rate will typically apply by default during customs clearance.

In short, the MFN tariff becomes the base import duty rate when no other preferential agreement is in place.

Do You Need Special Documents to Apply MFN Tariff?

Unlike FTA tariffs, MFN tariffs require no special documentation like a Certificate of Origin. Vietnam Customs automatically verifies the country of origin and applies the corresponding MFN rate if applicable.

However, if a company wishes to benefit from lower FTA rates, a valid C/O following the specific FTA requirements is mandatory.

>> Read more: What Are CO and CQ? Why Crucial in International Trade? (Updated 2025)

How Does MFN Tariff Affect Supplier Choice and Pricing Strategy?

Impact of MFN Tariffs

Import duties directly impact the landed cost of goods, which includes shipping fees and VAT. Understanding MFN rates helps importers:

• Negotiate better purchase prices with suppliers
• Set more competitive selling prices
• Optimize profit margins
  

For instance, if two suppliers offer the same product but one country enjoys MFN or FTA privileges, choosing the supplier with the lower import duty reduces total landed cost and increases product competitiveness.

Do MFN Rates Change? How Should Businesses Stay Updated?

Yes, MFN tariffs can change based on Vietnam’s government decisions and global trade conditions. Adjustments are published in the official Import Tariff Schedule issued by the Ministry of Finance.

Key factors that may affect MFN tariffs:

• Global market volatility
• Trade disputes
• Domestic economic policies
  

To avoid unexpected costs, businesses should monitor tariff updates regularly via:

• Vietnam Customs Portal
• Ministry of Finance publications
• Trusted logistics or customs agents
• Trade data sources like Alphaliner or WTO websites

Key Takeaways for Import-Export Businesses

• Classify goods accurately using correct HS codes to determine the applicable MFN rate
• Compare MFN and FTA tariffs to choose the most cost-efficient sourcing strategy
• Provide proper C/O documents to access lower FTA rates when eligible
• Track updates to MFN tariff schedules and trade regulations
• Check tax exemption conditions for certain products or scenarios (e.g., corporate income tax relief or 0% import duty)

>> Read more: What is an HS Code? How to Look Up HS Codes in Logistics

Optimize MFN Tariff Application with KFLV

Optimizing MFN Tariffs in Import Activities

MFN tariffs play a key role in determining the final landed cost and profitability of your imported goods. However, many businesses struggle with proper HS classification, tariff misapplication, or missing out on lower FTA rates due to incomplete documentation.

King Freight Logistics Vietnam (KFLV) – your trusted international logistics partner – is here to help:

• Assist in customs paperwork, origin documentation, and FTA C/O application
• Offer full-package logistics solutions from warehouse to destination, with transparent costs and timely delivery
• Provide up-to-date tariff data and regulatory insights tailored to your industry

Contact us at +84 (0) 938 188 796 or cs1@hcm.kfkingfreight.com for a free consultation and a tailored import-export plan that optimizes your duty payments and supply chain.