President Trump revealed on Monday that the United States would be implementing 25% tariffs on products imported from Japan and South Korea. The announcement was made through letters addressed to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung, shared on the Truth Social platform. These new tariffs are set to come into effect on August 1. Trump stated that if either country retaliates by raising tariffs, the U.S. will increase its tariffs by a corresponding amount.
The stock market reacted to this news, with the Dow Jones Industrial Average dropping over 500 points, or 1.1%, and the S&P 500 and Nasdaq Composite each falling 0.9%. Trump emphasized in his letters the importance of the trading relationship between the U.S. and Japan and South Korea, despite the existing trade deficits.
The president’s letters expressed eagerness to continue working together for a balanced and fair trade relationship. He invited the countries to engage in the robust U.S. economy, offering incentives for companies to manufacture within the U.S. to avoid tariffs. Trump also hinted at the possibility of adjusting the tariffs depending on the countries’ actions and emphasized the strength of the United States as a trading partner.
Trump’s tariff policy, announced in April, follows a reciprocal approach based on bilateral trade deficits. The policy, revealed during an event called “Liberation Day,” outlined tariffs of 24% on imports from Japan and South Korea, aligning closely with the 25% tariffs now imposed as per the recent announcement.
