Seoul vows to step up negotiations as Trump announces 25% tariffs on goods from Japan, South Korea

Straits Times

2 days ago

WASHINGTON – President Donald Trump on July 7 began telling trade partners - from powerhouse suppliers like Japan and South Korea to minor players - that sharply higher US tariffs will start August 1, marking a new phase in
the trade war he launched in earlier 2025.
The 14 countries sent letters so far, which included smaller US exporters like Serbia, Thailand and Tunisia, hinted at opportunities for additional negotiations while at the same time warning that any reprisal steps would be met with a like-for-like response.
'If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25 per cent that we charge,' Mr Trump said in letters, released on his Truth Social platform, to Japan and South Korea.
The higher tariffs take effect Aug 1, and notably will not combine with previously announced sector tariffs such as those on automobiles and steel and aluminium.
That means, for instance, that Japanese vehicle tariffs will remain at 25 per cent, rather than the existing 25 per cent sector tariff climbing to 50 per cent with the new reciprocal rate as has occurred with some of Mr Trump's tariffs.
The clock has been ticking for countries to conclude deals with the United States after Mr Trump in April unleashed a global trade war that has roiled financial markets and sent policymakers scrambling to protect their economies.
Trading partners got another reprieve as the White House said Mr Trump will sign an executive order on July 7
extending the July 9 deadline for negotiations to Aug 1.
Mr Trump has kept much of the world guessing on the outcome of months of talks with countries hoping to avoid the hefty tariff hikes he has threatened.
The rate for South Korea is the same as Mr Trump initially announced, while the rate for Japan is 1 point higher than first announced on April 2. A week later, he capped all of the so-called reciprocal tariffs at 10 per cent until July 9. Only two agreements have so far been reached, with Britain and Vietnam.
Ms Wendy Cutler, vice-president of the Asia Society Policy Institute, said it was unfortunate Mr Trump was hiking tariffs for two of the closest US allies, but there was still time for a breakthrough in negotiations.
'While the news is disappointing, it does not mean the game is over,' Ms Cutler said.
Mr Trump said later on July 7 that the United States would impose 25 per cent tariffs on Tunisia, Malaysia and Kazakhstan; 30 per cent on South Africa, Bosnia and Herzegovina; 32 per cent on Indonesia ; 35 per cent on Serbia and Bangladesh; 36 per cent on Cambodia and Thailand and 40 per cent on Laos and Myanmar.
South Korea said it planned to intensify US trade talks and considers Mr Trump's plan for a 25 per cent tariff from Aug 1 as effectively extending a grace period on implementing reciprocal tariffs.
'We will step up negotiations during the remaining period to reach a mutually beneficial result to quickly resolve the uncertainties from tariffs,' the country's Industry Ministry said.
South African President Cyril Ramaphosa said the 30 per cent US tariff rate was unjustified given that 77 per cent of US goods enter South Africa with no tariffs. His spokesperson said his government would continue to engage with the US.
There was no response from the Japanese embassy in Washington.
Market drop
US stocks fell in response, the latest market turmoil as Mr Trump's trade moves have repeatedly whipsawed financial markets and sent policymakers scrambling to protect their economies.
US stocks were
driven to near bear-market territory by his cascade of tariff announcements through the early spring but quickly rebounded to record highs in the weeks after he put the stiffest levies on hold on April 9.
The S&P 500 closed down about 0.8 per cent, its biggest drop in three weeks. US-listed shares of Japanese automotive companies fell, with Toyota Motor closing down 4.0 per cent and Honda Motor off by 3.9 per cent. The dollar surged against both the Japanese yen and the South Korean won.
'Tariff talk has sucked the wind out of the sails of the market,' said Mr Brian Jacobsen, chief economist at Annex Wealth Management. Most of the announced tariff rates have been rounded down, he added, and the letters come across as 'take it or leave it' offers.
US Treasury Secretary Scott Bessent said earlier on July 7 he expected several trade announcements in the next 48 hours, adding that his inbox was full of countries' last-ditch offers.
Trading blocs
The European Union will not be receiving a letter setting out higher tariffs, EU sources familiar with the matter told Reuters on July 7.
The European Union still aims to reach a trade deal by July 9 after European Commission President Ursula von der Leyen and Mr Trump had a 'good exchange,' a commission spokesperson said.
It was not clear, however, whether there had been a meaningful breakthrough in talks to stave off tariff hikes on the United States' largest trading partner.
The EU has been torn over whether to push for a quick and light trade deal or leverage its economic clout to negotiate a better outcome. It had already given up hopes for a comprehensive trade agreement before the July deadline.
Mr Trump has also said he could impose a 17 per cent tariff on EU food and agriculture exports. The president also threatened leaders of developing nations in the Brics group, who are meeting in Brazil, with an
additional 10 per cent tariff if they adopt 'anti-American' policies.
The group includes Brazil, Russia, India and China among others. REUTERS