Trump Hits Japan & Korea with 25% Tariffs in Trade War Escalation
Synopsis
U.S. President Donald Trump on Monday formally notified 14 trade partners, including Japan and South Korea, that from August 1, they will face harsher tariffs, escalating an already tense global trade environment. In letters…
U.S. President Donald Trump on Monday formally notified 14 trade partners, including Japan and South Korea, that from August 1, they will face harsher tariffs, escalating an already tense global trade environment. In letters posted to his social media account, Trump confirmed the 25% rate would apply to goods from key allies and other countries unless bilateral trade deals are signed in the coming weeks.
The announcement followed months of uncertainty after Trump launched a new round of reciprocal tariffs in April. While the U.S. had previously imposed specific-sector benefits, the new blanket rates mark a broader approach. Trump’s administration had set an earlier negotiation deal for July 10, but Trump signed an executive order on Monday extending it to August 1.
“If for any reason you decide to raise your tariff, then whatever the number you choose will be added, onto the 25% that we charge,” Trump said in a letter to Japan and South Korea. However, existing tariffs like the one already in place for auto imports will not be changed.
Markets React to Investor Process Uncertainty
News of the new tariff has led to a sharp drop in the U.S. market. The S&P 500 fell 0.8%, which is its worst session in three weeks. Japanese shares of automakers, which were listed in the U.S. market, also declined, with Toyota closing down 4% and Honda down to 3.9%. The dollar gained some strength against the yen and the South Korean won.
“Tariff talk has sucked the wind out of the sales of the market,” said Brian Jacobsen, chief economics at Annex wealth management. He said that the letters from Trump appeared to be “take it or leave it,” putting the countries in a very tight situation.
Despite the pressure, some countries see the extended deadline as a chance to return to the table. South Korea's industry ministry said it would intensify talks with U.S. officials to secure a deal before August 1.
New Tariff Rates Raise Global Stakes
Trump also announced tariffs ranging from 25% to 40% will be applied on goods from countries, including Serbia, Malaysia, Thailand, and Tunisia. Meanwhile, the European Union is not expected to get a similar letter and is continuing trade discussions with the White House.
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At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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