Trump To Impose 25% Tariffs On Japan, South Korea In August (1)
President Donald Trump announced 25% tariffs on goods from Japan and South Korea starting Aug. 1, as he moves to impose unilateral tariffs on countries that have not reached trade deals with his administration.
The two Asian countries were the first announcements in what the president promised would be a series of trade demands and deals announced Monday.
Trump’s hasty efforts to overhaul U.S. trade policy in his second term have been a source of persistent uncertainty for markets, central bankers and executives trying to gauge the impact on production, inventories, hiring, inflation and consumer demand — routine planning that is difficult enough without the costs of tariffs that go into effect one day and are gone the next.
In the end, the Japan and South Korea tariffs, shared on his Truth Social platform, were largely in line with what he had said the two countries would face. After a 90-day suspension of his so-called reciprocal tariffs, initially imposed on Japan at 24% and South Korea at 25%, Trump lowered them to 10% to allow time for negotiations.
Trump warned the countries against retaliating in his letter, saying any action would be met with a U.S. response.
"If for any reason you decide to increase the Tariffs, then, whatever amount you choose to increase them will be added to the 25% that we have set," Trump said.
Trump also said that the 25% tariffs do not include any sector-specific tariffs that the administration has or will separately impose on imported goods in key industries.
White House officials did not say whether additional letters of demand would be released on Monday, or whether the president still planned to announce trade deals with other countries. Treasury Secretary Scott Bessent said earlier in an interview with CNBC that he expected to "have some announcements in the next 48 hours." Trump’s tax levies would help fill the Treasury at a time when investors are worried about the nation’s rising debt, especially after Congress passed much of the president’s economic agenda in a $3.4 trillion tax-cutting and spending package last week. While U.S. stocks hit record highs Friday, the dollar has slumped and long-term borrowing costs remain high.
Japan and Korea were the fifth- and seventh-largest sources of U.S. imports last year — accounting for nearly 9% of the total.
In fact, the burden of the tariffs falls on American importers, who must contend with tighter profit margins, weigh price increases to consumers or seek discounts from their foreign suppliers. “All that new revenue is just a tax on U.S. businesses,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, wrote in a LinkedIn post Friday.
“Global uncertainty continues to be at an all-time high,” Allianz Research economists wrote last week in a report forecasting world economic growth this year of 2.5% — the weakest since 2008, excluding recessions. “This will lead to a synchronized downturn in the economic cycle in both developed and emerging markets.”
On April 2, Trump held a Rose Garden ceremony announcing steeper levies on more than 50 trading partners ranging as high as 50% — a shock to the economic outlook that sent financial markets into a tailspin and stoked fears of a recession. A week later, he suspended the tariffs.
The negotiating paths are different for the U.S.’s three largest trading partners — Mexico, Canada and China. Beijing and Washington have negotiated a truce that has lowered tariffs on Chinese goods that have soared to 145% and eased export controls on key supplies. As partners in the U.S.-Mexico-Canada Agreement, the two U.S. neighbors are not subject to reciprocal tariffs and are instead trying to negotiate lower rates on sectoral levies. (alg)
Source: Bloomberg
