President Trump revealed on Monday that the United States would impose 25% blanket tariffs on imports from Japan and South Korea starting August 1, as part of his ongoing trade strategy.
The announcement came through letters shared on Truth Social, addressing Japanese Prime Minister Ishiba Shigeru and South Korean President Lee Jae-myung to notify them of the new tariff rates being implemented.
The big picture: The letters indicated that the 25% tariffs would be applied separately from additional sector-specific duties on specific product categories, emphasizing that goods transshipped to evade higher tariffs would be subject to those higher tariffs.
- Trump’s decision was driven by the goal of correcting persistent U.S. trade deficits with Japan and South Korea, which amounted to $68.5 billion and $66 billion in goods deficits, respectively, as reported by the Office of the United States Trade Representative for the year 2024.
- The President, known for his strong stance on tariffs and skepticism towards free trade deals, justified the new tariff rates as a necessary step to address what he sees as unfair trade practices impacting the U.S.
State of play: The trade announcement led to a significant reaction in the financial markets, with the Dow Jones Industrial Average dropping 447 points or 1%, the S&P 500 losing 0.8%, and the Nasdaq Composite declining 0.9% in response to the news.
What we’re watching: The form letters sent by Trump set the stage for potential additional letters to be shared between Monday and Wednesday, as part of his strategy to address reciprocal tariffs on multiple countries that were on track to revert to higher levels initially set in April.
