President Donald Trump plans to impose 25 percent tariffs on two longtime U.S. allies, South Korea and Japan, beginning next month.
Trump wrote letters to Japanese prime minister Shigeru Ishiba and South Korean president Lee Jae Myung notifying them of his intention to slap the 25 percent tariffs on all imports from their respective nations beginning August 1.
He also threatened to raise the tariffs even higher if the other nations respond to Trump’s 25 percent rate with reciprocal tariffs. If South Korea and Japan eliminate their tariffs against the U.S., Trump said he would be opening to adjusting his tariff rate on them.
Trump sent similar letters to the leaders other lesser trading partners of the U.S. Both Japan and South Korea are in the top ten of U.S. trading partners, according to Census data.
U.S. tariff rates were originally scheduled to spike on July 9 at the end of Trump’s delayed implementation of his sweeping global tariffs. The letters appear to suggest Trump is going to extend the deadline on country-specific tariff rates for at least a couple more weeks.
Trump’s letters argue the 25 percent universal tariff is much less than the percentage needed to fix U.S. trade deficits with Japan and South Korea. His assertion is consistent with Trump’s longstanding belief that international trading partners are ripping off the U.S. and tariffs are needed to fix the problem. Supporters of tariffs also believe they are necessary to revitalize American manufacturing and create jobs for American workers.
Most economists and view tariffs as taxes on businesses and consumers that needlessly raise prices. Financial analysts have predicted Trump’s tariffs would cause severe economic damage, but those effects have not happened yet, in part because Trump paused most of them for the time being.
Trump announced “liberation day” tariffs in April that would dramatically increase levies on most U.S. trading partners with little time for businesses to prepare. His tariffs consisted of a global 10 percent tariff and specific tariffs on each nation depending on a controversial trade deficit formula the administration used to calculate rates.
The president’s sweeping tariffs were met with panic on Wall Street and doomsday forecasts for the U.S. economy. With the market in freefall, Trump announced a 90 day pause on most of the “liberation day” tariffs as the U.S. began negotiating deals with other nations. Last week, Trump announced a new trade deal with Vietnam consisting of 20 percent U.S. tariffs and no retaliatory tariffs from the Vietnamese.
“We’ve had a lot of people change their tune in terms of negotiations,” Treasury Secretary Scott Bessent told CNBC when discussing the ongoing negotiations with countries worldwide.
“So my, my mailbox was full last night with a lot of new offers, a lot of new proposals.”
Trump’s emergency tariffs under the International Emergency Economic Powers Act are the subject of multiple ongoing legal challenges set to be decided federal appellate courts. The Supreme Court declined to intervene in June to immediately step in and address Trump’s emergency tariffs for a case involving two Illinois-based companies.