Donald Trump has revived his threat to hit major trading partners with steep “reciprocal” tariffs even as he granted a three-week reprieve for countries to negotiate trade deals with the US.
The president on Monday sent letters to Japan and South Korea, among the US’s biggest trading partners, saying the country would impose 25 per cent levies on them from August 1.
South Africa would be hit with 30 per cent tariffs, Trump said, while also announcing big levies on 11 other countries.
The tariffs were roughly on a par with those Trump unveiled during his “liberation day” announcement on April 2, which prompted severe ructions across global financial markets.
The reciprocal levies, which affected dozens of countries, were paused until July 9, steadying markets. But since then the White House has struck just three trade pacts — with the UK, China and Vietnam.
Trump late on Monday left the door open for further deals, saying that the letters were “more or less final offer[s]”.
“I would say final. But if [countries] call with a different offer, and if I like it, we’ll do it. I would say firm . . . but not 100 per cent firm. If they call up and they say [they] would like to do something a different way, we’re going to be open to that.”
The US was close to agreeing a trade deal with India, the president added.
The White House released an executive order on Monday that said the reciprocal levies would now go into effect at just after midnight on August 1. The president made the decision “based on additional information and recommendations from various senior officials, including information on the status of discussions with trading partners”, the order said.
Global stock markets were unfazed on Tuesday, with Japan’s Topix closing up 0.2 per cent and South Korea’s Kospi rising 2 per cent. In Europe, the Stoxx Europe 600 and FTSE 100 edged up 0.1 per cent in early trading, while futures tracking the S&P 500 rose 0.1 per cent.
Investors were “taking the view that nothing is final and that these letters merely mark another iteration on the journey towards trade deals”, analysts at ING noted.
In almost identical letters posted on his Truth Social platform, Trump said the US goods trade deficits with the countries targeted on Monday, which included Indonesia, Malaysia and Thailand, were a “major threat to our economy and indeed our National Security”.
In the letters, addressed to Shigeru Ishiba, Japan’s prime minister, and Lee Jae-myung, South Korea’s president, Trump added that if either country increased its tariffs in retaliation “then, whatever the number you choose to raise them by, will be added on to the 25 per cent that we charge”.
But he said if the countries opened their markets “we will, perhaps consider an adjustment . . . These tariffs may be modified, upward or downward, depending on our relationship with your Country”.
The US already has a series of sectoral tariffs on imports from all countries, including a 25 per cent tariff on cars and car parts and a 50 per cent tariff on all imports of steel and aluminium.
A US official confirmed that the goods that were already subject to sectoral tariffs, such as vehicles and metals, would not be affected by the new rates outlined by Trump.
Washington also has national security probes that could lead to tariffs on a range of other goods and industries, including aerospace, pharmaceuticals, wood, copper, chips and consumer electronics.
Trump has escalated his rhetoric against Tokyo in recent weeks, singling out the crucial trading partner and attacking it as “spoiled” for refusing to purchase more American rice.
Tokyo has demanded a full exemption from Trump’s 25 per cent vehicle tariffs. In Tokyo, Ishiba said in televised comments on Tuesday that the tariffs threatened in the letter were “truly regrettable”.
Japan’s trade negotiator Ryosei Akazawa spoke to US commerce secretary Howard Lutnick for 40 minutes on Tuesday, and the two agreed to further negotiations, according to a Japanese official.
Meanwhile, US trade talks with South Korea were delayed by political turmoil in Seoul following the impeachment of former president Yoon Suk Yeol.
South Korea’s industry ministry said on Tuesday that “we will push forward with negotiations to produce mutually beneficial outcomes in the time remaining”.
Separately, the EU expected to sign a temporary trade deal with the US this week that would keep tariffs at 10 per cent while talks continued, trade commissioner Maroš Šefčovič told member states on Monday.
The two sides were working on plans to reduce the 25 per cent tariff on vehicles but there was no guarantee levies on steel would be reduced from their 50 per cent level, he added, according to three people briefed on the discussions.
Additional reporting by Andy Bounds in Brussels, Kate Duguid in New York, William Sandlund in Hong Kong and Leo Lewis in Tokyo
