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Donald Trump has renewed 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, both among the US’s biggest trading counterparts, saying the country would impose 25 per cent levies beginning on August 1. South Africa would be hit with 30 per cent tariffs, Trump said, while also announcing big levies on several other countries.
The tariffs were roughly on a par with those Trump unveiled during his “liberation day” announcement on April 2, which had prompted severe ructions across global financial markets.
The reciprocal levies were paused a week later to July 9, steadying markets. But since then the White House has struck just three trade pacts — with the UK, China and Vietnam.
White House press secretary Karoline Leavitt said on Monday that new tariffs would now go into effect for countries that had not yet struck a deal on August 1, granting them more time for trade negotiations.
The scale of Trump’s tariff threats on Monday pressured markets despite the delay in their implementation. The S&P 500 ended Monday down 0.8 per cent. Meanwhile, the Japanese, South Korean and South African currencies all declined about 1 per cent against the US dollar.
In letters posted on his Truth Social platform, Trump said the US goods trade deficit with Japan and South Korea was 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 in an indication that the proposed tariffs could be negotiated down, 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.”
Trump also on Monday announced steep tariffs against Indonesia, Malaysia, Thailand, Kazakhstan, Laos, Myanmar and several other countries.
The US already has a series of sectoral tariffs on imports from all countries, including a 25 per cent tariff on autos and auto 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 autos and metals, would not be affected by the new rates outlined by Trump in addition.
Washington also has national security probes that could lead to tariffs on a range of other goods and industries, including aerospace, pharmaceuticals, lumber, 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.
Weeks of negotiations between US and Japanese trade negotiators have produced a number of proposals aimed at breaking the trade deadlock, including Japan buying more US energy and agricultural products. But Tokyo has also demanded a full exemption from Trump’s 25 per cent auto tariffs.
Meanwhile, US trade talks with South Korea were delayed by political turmoil in Seoul following the impeachment of former Korean president Yoon Suk Yeol.
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 two people briefed on the discussions.
Additional reporting by Andy Bounds in Brussels