In a significant move likely to shake global trade dynamics, U.S. President Donald Trump announced on Monday that the United States will impose a 25% tariff on imports from Japan and South Korea, effective August 1. These developments were made public through letters Trump addressed to the leaders of both nations, which he shared via his Truth Social account.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,” Trump warned in the letters.
White House spokeswoman Karoline Leavitt revealed that 12 countries in total will be receiving such letters. However, she did not disclose all names. So far, only the UK and Vietnam have successfully negotiated trade deals with the U.S.
Leavitt stated:
“There will be additional letters in the coming days,” and added that “we are close” on some deals.
Furthermore, U.S. President Donald Trump will sign an executive order delaying the initial July 9 deadline to August 1, offering trading partners additional time for negotiations.
In a follow-up to the Japan-South Korea announcement, Trump confirmed additional tariff hikes:
25% tariffs on Malaysia and Kazakhstan
30% tariffs on South Africa
40% tariffs on Laos and Myanmar
The 25% rate for South Korea remains consistent with Trump's original April 2 announcement, whereas the tariff for Japan has increased by one percentage point. Earlier, on April 9, Trump had temporarily capped all tariffs at 10%, a hold that lasted until July 9.
The announcement had an immediate impact on the financial markets:
The S&P 500 index dropped nearly 1%, marking its steepest decline in three weeks.
Toyota Motor Co. shares fell 4.1%, and Honda Motor Co. declined 3.8%.
The U.S. dollar surged against both the Japanese yen and South Korean won.
These market jitters follow a series of similar disruptions since Trump re-entered office in January, initiating what many are calling a global trade war 2.0.
With the August 1 deadline fast approaching, countries are making urgent efforts to negotiate:
South Korea and Indonesia have sent delegates to Washington.
Thailand has proposed eliminating tariffs on multiple U.S. products.
Treasury Secretary Scott Bessent commented:
“We’ve had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals.”
He further revealed that multiple trade announcements are expected in the next 48 hours, though he did not specify the nations involved.
The European Union remains in talks, hoping to clinch a deal before the new deadline. According to EU sources, the bloc will not receive a tariff letter. Nonetheless, Trump has threatened a 17% tariff on EU agricultural exports.
Meanwhile, at the BRICS Summit in Brazil, Trump raised further concerns by threatening a 10% tariff on BRICS countries aligning with "anti-American" policies. This bloc includes Brazil, Russia, India, China, and South Africa, along with new entrants Egypt, Ethiopia, Indonesia, Iran, and the UAE.
A source familiar with the strategy said:
“The new 10% tariff will be imposed on individual countries if they take anti-American policy actions.”
The South African rand took a hit following the threat, while Russia reiterated that BRICS is not intended to act against any country.
Kremlin spokesperson Dmitry Peskov stated:
“This cooperation within BRICS has never been and will never be directed against any third countries.”
Within the EU, the approach toward the U.S. tariffs remains divided. While some nations prefer a swift, limited trade deal, others advocate leveraging Europe’s economic influence for a better long-term outcome.
A spokesperson for European Commission President Ursula von der Leyen said:
“We want to reach a deal with the U.S. We want to avoid tariffs.”
Without a preliminary agreement, U.S. tariffs on EU imports are set to rise from 10% to 20%.
In a bid to avoid economic fallout, German Chancellor Friedrich Merz, along with leaders from France and Italy, held urgent talks over the weekend.
A German government spokesperson added:
“The parties should allow themselves ‘another 24 or 48 hours to come to a decision.’”
The urgency is warranted. Mercedes-Benz announced a 9% drop in Q2 car and van sales, attributing the dip to tariff-related disruptions.
Donald Trump's announcement of a 25% tariff on imports from Japan and South Korea marks a major escalation in the renewed U.S. trade offensive, with broader implications for global markets and international diplomacy. As Trump signals more such tariff letters to nearly a dozen countries, including members of BRICS and Southeast Asia, the world braces for economic ripple effects.
With only two nations—Britain and Vietnam—having secured tariff agreements so far, the pressure is mounting on other countries to strike deals before the new August 1 deadline. While the European Union is racing to avoid broader 20% tariffs, Trump's aggressive stance—particularly his warning of penalties for "anti-American" policies—reflects a sharp return to nationalist trade strategies.
Markets have already responded with volatility, seen in the drop of S&P 500, Japanese auto stocks, and currency swings. As negotiations continue and deadlines loom, the next few weeks will be crucial in determining whether Trump's administration can reshape global trade alliances—or spark a new wave of economic uncertainty.