Washington: President Donald Trump has officially postponed the implementation of higher tariffs on US imports, while simultaneously notifying 14 countries, including Japan and South Korea, about the new tariffs they will face. This decision comes as a 90-day suspension of some of the White House’s most aggressive import taxes was nearing its expiration this week.
According to BBC, the president reiterated his threat of a 25% tariff on products entering the US from Japan and South Korea, and issued letters to global leaders warning of new levies effective from August 1. These letters, shared on social media, indicated that the tariff rates might be adjusted "upward or downward, depending on our relationship with your country." Most of these rates align with those announced in April during Trump’s "Liberation Day" proclamation, which warned of new taxes on goods from several countries.
The letters suggest the possibility of further trade negotiations, as noted by Vasu Menon, an investment strategist from OCBC bank. He remarked that the president’s actions appear to be more of a negotiating tactic rather than a concrete tariff threat, providing some optimism to investors. Trump's stance is that tariffs will protect American businesses and promote domestic manufacturing and jobs. However, economists argue these measures could lead to increased prices in the US and a reduction in trade.
Japan, a major supplier of US imports, saw its US-listed shares, like Toyota, fall by 4% on Monday. Japan’s Prime Minister Shigeru Ishiba expressed a commitment to continue discussions with the US to secure a mutually beneficial agreement. South Korea is also planning to use the deadline extension to intensify its negotiations with the US. Meanwhile, Thailand’s finance minister is optimistic about reaching an agreement similar to those with other countries.
The US president also announced plans for tariffs on goods from Myanmar, Laos, Thailand, Cambodia, Serbia, Bangladesh, Indonesia, South Africa, Malaysia, and Tunisia, with rates ranging from 25% to 40%. White House Press Secretary Karoline Leavitt indicated that more letters could be forthcoming, dismissing concerns that extending the deadlines might weaken the impact of Trump’s threats. She emphasized the frequency of calls from world leaders seeking deals.
As financial markets experienced turmoil following the initial announcement of steep tariffs in April, Trump suspended some of the highest duties to facilitate talks while maintaining a 10% levy. Treasury Secretary Scott Bessent anticipates a busy period ahead, noting an influx of new offers and proposals following the announcement of the new tariffs.
The US has made partial trade agreements with the UK, Vietnam, and China, with India reportedly close to a deal. These agreements have generally resulted in raised tariffs compared to pre-Trump levels, though significant issues remain unresolved. The complex policies have complicated trade talks, particularly around car tariffs, which are a major point of contention with Japan and South Korea. In recent developments, Trump threatened the EU with a 50% tax unless an agreement was reached, and warned Japan of a potential 30% to 35% tariff if a deal was not secured by Wednesday.