President Donald Trump cranked up the pressure Monday on America’s trading partners, firing off letters to heads of several countries, informing them of their new tariff rate. But at the same time, the White House said Trump would take some of the edge off, with plans to sign an executive action Monday to extend the date for all “reciprocal” tariffs to August 1.
Those “reciprocal” tariffs were expected to go into effect Wednesday. In some cases, the letters Trump sent specify new “reciprocal” tariff rates that are higher or lower compared to April levels.
Japan’s Prime Minister Shigeru Ishiba and South Korea’s President Lee Jae-myung were the first recipients of Trump’s letters.
Both countries will face a 25% tariff come August 1, Trump said in posts on Truth Social displaying the letters, potentially giving countries more time to negotiate deals. Around two hours later, he announced similar letters were sent to Malaysia, Kazakhstan, South Africa, Myanmar and Laos, informing their leaders of new tariff rates as high as 40%.
Even more letters could be coming: Trump is set to announce “approximately 12 of these letters” on Monday, White House press secretary Karoline Leavitt told reporters at a news briefing. The letters will be announced via social media posts from the president, she said, but declined to preview which countries would be named.
In the seven letters sent — to Japan, South Korea, Myanmar, Laos, South Africa, Kazakhstan and Malaysia — Trump said he takes particular issue with the trade deficits the United States runs with them, meaning America buys more goods from there compared to the amount that American businesses export to those countries. Trump also said the tariffs would be set in response to other policies that he deems are impeding American goods from being sold abroad.
He encouraged country leaders to manufacture goods in the United States to avoid tariffs.
This comes ahead of his initial 12:01 a.m. ET July 9 deadline for countries to make deals or face the threat of higher tariffs. That date marks the end of the pause on “reciprocal” tariffs, which briefly went into place in April. Since then, impacted countries have faced a minimum 10% tariff.
However, Leavitt said Trump will sign an executive order on Monday pushing that deadline to August, which is “in the best interest of the American people.” She also said Trump’s phone “rings off the hook from world leaders all the time who are begging him to come to a deal.” Yet only three deals have been announced over the past three months.
In all seven letters, Trump threatened to raise tariffs even higher than the specified rates if a country retaliated against the United States with tariffs of their own. Trump said these rates would be “separate from all Sectoral Tariffs,” meaning, for instance, the new tariff won’t be stacked on top of the current auto tariff of 25%, the White House confirmed. That would apply to any future sector-specific tariffs, too, a White House official said.
Collectively, the US bought $351 billion worth of goods last year from the seven countries that received letters on Monday, according to US Commerce Department figures. Japan and South Korea, America’s sixth- and seventh-largest trading partners, accounted for 80% of that, shipping a total of $280 billion worth of goods to the US last year.
The prospect of higher tariffs on goods could translate into higher prices for American consumers. Among the top goods America imports from South Korea and Japan, for example, are cars, auto parts, semiconductors, pharmaceuticals and machinery. Trump has placed or threatened to levy industry-specific tariffs on many of these goods.
In April, Japan was set to face a 24% tariff, while South Korea was set to face a 25% tariff.
While the other five countries ship less to the US compared to Japan and South Korea, in many cases they are among the top foreign sources of goods.
For instance, South Africa, which is set to face 30% tariffs, accounted for roughly half of the platinum the US imported from other countries last year and was the top foreign supplier of it.
Malaysia, which is set to face a 24% tariff versus the 25% rate Trump announced in April, was the second-top source of semiconductors shipped to the US last year, with Americans purchasing $18 billion worth of them from there.
Despite Trump saying country-specific tariffs won’t be stacked on top of sectorial ones, shares of auto companies that have a heavy manufacturing presence in Japan and South Korea declined sharply. For instance, US-listed shares of Nissan Motors were down over 7%, while Toyota and Honda shares were down 4%.
Stocks tumble after Trump announces 25% tariffs on Japan and South Korea starting August 1
Those declines, however, may reflect the increased likelihood of Trump potentially raising tariffs on cars from the two countries should they retaliate against the general 25% tariffs, were they to go into effect, by slapping higher tariffs on American goods.
“These Tariffs may be modified, upward or downward, depending on our relationship with on our relationship with your Country. You will never be disappointed with The United States of America,” Trump ended the letters before signing off.
US stocks, which were already sliding, dropped lower after more tariffs were announced. The Dow moved lower by 667 points, or 1.48%. The S&P 500 fell 1.19% and the Nasdaq fell 1.27%.
Credit: CNN
