US President Donald Trump has intensified pressure on Japan and South Korea by informing their leaders of impending tariffs. Effective August 1, both nations will be subjected to a 25% tariff rate on certain goods, as outlined in letters shared on Trump’s social media platform, Truth Social. This announcement comes ahead of a July 9 deadline, after which further tariffs may be imposed if negotiations fail.
In the correspondence, Trump raised concerns regarding the substantial trade deficits the United States has with Japan and South Korea, highlighting that the US imports significantly more from them than it exports. He indicated that these tariffs are also a response to policies that he perceives as barriers to American exports.
Trump has insisted that a 25% tariff is still insufficient to rectify the trade imbalance and urged both countries to consider manufacturing goods within the US to bypass these tariffs. He stated that companies from Japan and South Korea could avoid the tariff entirely if they decide to produce their products in the United States and assured them of a streamlined approval process for such initiatives.
In a stern warning, Trump also mentioned that if either Japan or South Korea retaliates with their own tariffs, the US would respond by further increasing its tariffs beyond the initial 25%. He emphasised that the amount added would correspond to the percentage of the tariffs imposed by these countries.
Initially, Japan faced a proposed 24% tariff, while South Korea was set for a 25% rate, as confirmed by the White House. Notably, these tariffs will not be cumulative; for example, a car from either country with an existing 25% tariff will not incur an additional charge, avoiding a combined rate of 50%.
The announcement sparked immediate declines in automotive stocks before markets opened, with significant drops in shares of companies like Nissan, Toyota, and Honda, indicating investor concerns over potential retaliatory tariffs on American goods.
Trump concluded his letters with a promise that the tariffs could be recalibrated based on the evolving relationship between the United States and these nations. Market reactions to Trump’s tariff announcement led to a further decline in US stocks, with the Dow Jones falling over 500 points shortly thereafter.
The situation remains fluid, and it appears the administration may continue to hold discussions with other countries should they not secure satisfactory trade agreements by the looming deadline.