U.S. Defense Secretary Mark Esper disclosed the decision during an address in Vietnam, which has emerged as the most vocal opponent in Asia of China’s territorial claims in the South China Sea, which Vietnam calls the East Sea.
In his speech, Esper took aim at China, which he accused of "bullying" neighbors, like Vietnam.
"China's unilateral efforts to assert illegitimate maritime claims threaten other nations' access to vital natural resources, undermine the stability of regional energy markets, and increase the risk of conflict," Esper told students at the Diplomatic Academy of Vietnam.
The vessel will be Vietnam's second cutter from the U.S. Coast Guard, which just two years ago transferred a Hamilton-class cutter to Vietnam. By providing the ships, the U.S. hopes to enable Vietnam to assert its sovereignty and deter China.
More than four decades after the Vietnam War ended, ties between the United States and Vietnam are increasingly focused on shared concerns over Chinese expansion.
China claims 90 percent of the potentially energy-rich South China Sea, through which about $3 trillion of trade passes each year.
Beijing in July sent a ship for a months-long seismic survey to an area internationally designated as Vietnam's exclusive economic zone (EEZ).
Speaking earlier at Vietnam’s defense ministry, Esper said the international rules-based order "has come under duress."
"Collectively, we must stand up against coercion and intimidation, protect the rights of all nations, big and small," Esper said.
The United States accuses China of militarizing the South China Sea and trying to intimidate Asian neighbors who might want to exploit its extensive oil and gas reserves.
In April, the United States delivered six patrol boats worth $12 million to Vietnam's Coast Guard. Those vessels were in addition to another twelve "Metal Shark" patrol boats it provided to Vietnam in the last two years.