Trump Shakes Up Trade: Japan and South Korea Hit With New Tariff Rates as Letters Go Out

Trade tensions flare as the Trump administration rolls out fresh tariffs targeting key Asian economies. Japan and South Korea—longstanding US allies—now face recalibrated trade terms, delivered via formal letters. No numbers disclosed, but the move signals a hardline stance on trade deficits.

Economic Shockwaves or Political Theater?

The letters land like bureaucratic grenades—no warning, just policy shrapnel. Markets brace for ripple effects while analysts wonder if this is genuine economic strategy or just another headline-grabbing maneuver. Either way, corporate treasuries are scrambling to adjust their spreadsheets.

Cynical Finance Jab:
Because nothing says 'diplomacy' like passive-aggressive paperwork and tariffs that'll inevitably get passed down to consumers. Thanks, global trade.

President Trump begins hitting trade partners

The letter to Japan opens by highlighting the close trading relationship despite a persistent deficit and invites Japanese firms to tap the vast U.S. domestic market.

It notes that all imports will incur the 25% levy alongside any sector tariffs. The document adds, “Goods transshipped to evade a higher Tariff will be subject to that higher Tariff.” It offers no tariff on products built in the U.S. and promises approvals “in a matter of weeks.”

An almost identical letter was sent to South Korea. It praises the trade ties, notes the deficit and calls for fairer exchange. The 25% tariff will apply to all Korean goods in addition to sector duties. The note repeats the transshipping warning and the no-tariff offer for items made in the U.S. It adds that any rise in Korea’s own duties will be added on top of the 25%.

Markets dip ahead of more trade announcements

Stocks dipped around midday Monday after the announcements, as investors worried about the new tariffs and possible backlash from Japan or South Korea.

The Dow fell 447 points (about 1%), the S&P 500 dropped 0.8%, and the Nasdaq slipped 0.9%. Toyota and Honda shares fell about 4% after Trump’s news. AMD and Nvidia dipped a little, and Apple and Alphabet dropped just over 1%.

The latest duties will kick in on August 1 and WOULD stack on top of any retaliatory levies. Treasury Secretary Scott Bessent told CNBC to expect more trade announcements within 48 hours and said it “will be a busy couple of days.”

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