WASHINGTON -- U.S. President Donald Trump released the first batch of letters to its trading partners on Monday, starting with allies Japan and South Korea, notifying them of their new tariff rates with America, beginning Aug. 1.
The president noted that goods from the two countries each will be charged 25% tariffs. The 25% rate marks a 1 percentage point increase for Japan from the initially announced "reciprocal" tariff on April 2, and the same rate for South Korea.
Later in the day, the president released several other letters, levying a 40% rate on Myanmar and Laos; 36% each for Thailand and Cambodia; Bangladesh 35%; Indonesia 32% and 25% each for Malaysia and Kazakhstan.
Goods from South Africa were charged 30%, while Serbia saw a 35% tariff.
Trump told the allies that retaliatory tariffs will be met with additional tariffs. "If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added to the 25% that we charge," he wrote in the letters.
In his letter to Japan, Trump wrote that the new 25% tariff is separate from all sectoral tariffs, a reference to the sector-specific levies imposed for national security reasons, based on Section 232 of the U.S. Trade Expansion Act of 1962. These include the 25% auto tariffs, which Japan has been negotiating to reduce.
In the letters, the president left open a path to alter the tariffs.
"If you wish to open your heretofore closed Trading Markets to the United States, and eliminate your Tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter," he declared.
"These Tariffs may be modified, upward or downward, depending on our relationship with your Country," he added.
Japan currently imposes no tariffs on imported passenger vehicles.
Matthew Goodman, director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations, told Nikkei Asia that Japan is the most important U.S. ally in Asia and that it is hard to understand how Trump would "make threats" to impose tariffs in such a way.
"The only comfort is that it is just a letter and not an actual tariff yet. There could be a negotiated solution before Aug. 1," Goodman said.
He said Trump had an incentive to postpone the implementation of the tariffs from July 9 in the hopes of reaching some deals due to the possibility of an adverse financial market reaction on stocks, bonds and the dollar if the tariffs were immediately reinstated. "A lot of American companies and some of his supporters are going to be unhappy," if such financial turmoil were to occur, Goodman said.
According to the Office of the United States Trade Representative, Japanese goods exported to the U.S. totaled $148.2 billion last year, while U.S. goods exported to Japan reached $79.7 billion. The U.S., as a result, has a $68.5 billion goods trade deficit with Japan.
South Korean goods exported to the U.S. reached $131.5 billion, while American goods exported to South Korea totaled $65.5 billion, resulting in a $66 billion trade deficit for the U.S.
The U.S. has its largest trade deficit with China, totaling $295.4 billion in 2024. Trade deficits with other major economies include $235.6 billion with the European Union, $171.8 billion with Mexico, $123.5 billion with Vietnam, $73.9 billion with Taiwan, $63.3 billion with Canada and $45.7 billion with India.
Speaking to reporters on Air Force One on Thursday, Trump said he was keen to send out letters to trading partners rather than close deals with the European Union or India.
"I think that letters are better for us. I've said that all along," he said.
"I think a simple tariff is simpler than ... better than sitting down and working 15 different things," he added, signaling that he was not a fan of category-by-category tariffs.
This is in line with what observers witnessed with the Vietnam deal announced last week. Trump, on his social media platform Truth Social, said he had spoken to To Lam, the general secretary of the Communist Party of Vietnam, and made a "Great Deal of Cooperation" that would see Vietnamese goods facing a 20% tariff upon entering the U.S., and a 40% tariff on any transshipped goods. American goods will not be charged tariffs entering Vietnam.
This was not the outline of the deal negotiated at the working level, a source familiar with the preparations told Nikkei Asia.
According to the source, officials from the two sides had been negotiating a goods-by-goods tariff rate that would have been, on average, below 20%. While the details of the call between Trump and To Lam have not been disclosed, it could be that Trump chose to impose an across-the-board tariff instead.
