US President Donald Trump has initiated a pivotal new chapter in the trade war he set in motion earlier this year. In a recent communication to various international partners—ranging from major suppliers like Japan and South Korea to smaller economies—he announced that they should prepare for significantly higher tariffs starting from August 1.
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The decision to impose a 25% levy on all goods from key allies Japan and South Korea sent ripples through Wall Street, though markets in Asia appeared to absorb the news more calmly. As Mr. Trump conveyed in letters sent to 14 countries, there exists a path for further negotiations but with the caveat that retaliatory measures will be met with equivalent responses. “If, for any reason, you decide to raise your tariffs, then whatever number you choose to raise them by will be added on to the 25% that we charge,” he stated, highlighting the seriousness of the situation.
Countries have felt increased pressure to finalize trade agreements with the US since Mr. Trump launched a global trade war in April, leading to market turmoil and prompting policymakers to scramble to safeguard their economies. Fortunately, trading partners received a temporary respite when Mr. Trump signed an executive order extending the August 1 deadline for negotiations.
When asked about the certainty of this deadline, Mr. Trump remarked, “I would say firm, but not 100% firm. If they call up and they say we’d like to do something a different way, we’re going to be open to that.”
Regarding the EU, sources close to the matter indicated that the bloc will not receive any notification of increased tariffs at this time. The European Commission is still hopeful about reaching a trade agreement by the deadline, following a “good exchange” between European Commission President Ursula von der Leyen and Mr. Trump.
Interestingly, the EU finds itself at a crossroads, caught between the desire for a swift agreement and the potential leverage its economic weight could offer for a more favorable outcome. Tánaiste and Minister for Foreign Affairs Simon Harris commented on the situation, stating that the three-week extension serves as a “clear indication” that Mr. Trump “understands there is a need for trade.” Yet, he voiced ongoing concerns regarding the pharmaceutical industry, emphasizing that “there’s a lot of work to be done.”
Minister for Agriculture Martin Heydon has expressed skepticism regarding the potential for zero tariffs between the US and the EU, noting, “It might be for certain products.” He highlighted the significant market for Irish butter in the US, currently subject to a 16% tariff, expressing concern that any additional tariffs would exacerbate challenges in that sector.
Fergal O’Brien, Ibec’s Executive Director for Lobbying and Influence, stated, “The US could get hooked on the revenue that tariffs produce for its economy,” a sentiment reflecting the complexities of this evolving trade landscape. Speaking on RTÉ’s Morning Ireland, he noted that despite the ongoing challenges, the Irish economy has shown remarkable resilience over the past six months. He added, “For most products, the weakness of the dollar has been on the same scale as the tariffs,” indicating a double hit for the industry.
Mr. Trump has also declared a range of tariffs, including 25% on goods from Tunisia, Malaysia, and Kazakhstan, escalating to as much as 40% on imports from nations like Laos and Myanmar. A potential deal with India appears to be on the horizon, boosting hopes for a reprieve in the strife.
Japanese Prime Minister Shigeru Ishiba shared optimism regarding the prospect of avoiding higher tariffs, stating that some progress has been made. He mentioned, “We have received a proposal from the United States to swiftly proceed with negotiations towards the newly set August 1 deadline,” underscoring the dynamic nature of these discussions.
Similarly, South Korea is pushing to accelerate trade talks with the US, perceiving Mr. Trump’s latest move as a de facto grace period regarding reciprocal tariffs. Meanwhile, Thailand remains optimistic about achieving competitive tariff rates comparable to other nations.
In Malaysia, officials recognize US concerns regarding trade imbalances but assert that constructive dialogue remains the most viable solution. Indonesia, too, is maintaining an open stance for negotiations, positioning its top negotiator for discussions in Washington.
In Bangladesh, where the garment industry makes up a staggering 80% of export earnings, officials expressed shock at the tariff announcements. “This is absolutely shocking news for us,” stated Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association. “We were really hoping the tariffs would be somewhere between 10-20%,” he lamented, voicing significant concern for the industry’s future.
South African President Cyril Ramaphosa deemed the 30% tariff unjustified, highlighting that 77% of US goods face no tariffs in South Africa. His spokesperson confirmed that the government would continue its engagement with US authorities.
The stock market reacted negatively, with US stocks falling in response to the announcement. The S&P 500 closed down about 0.8%, while Asian markets held steady. US Treasury Secretary Scott Bessent has indicated we could expect further trade announcements in the coming days, noting that his inbox is flooded with last-minute offers from various countries.
So far, only two trade agreements have been finalized—with the UK and Vietnam. Meanwhile, the US and China have agreed on a framework for tariff rates, with a looming August 12 deadline for China to solidify a deal to avoid additional import restrictions. Tensions remain, as China has warned against re-imposition of tariffs on its goods and hinted at retaliatory actions against countries attempting to exclude it from supply chains.
Mr. Trump further cautioned the leaders of developing nations in the BRICS group meeting in Brazil about an additional 10% tariff should they adopt “anti-American” policies.
As this trade landscape continues to shift, the stakes are undeniably high, and the world watches closely.
Edited By Ali Musa
Axadle Times International – Monitoring.
