US President Donald Trump has announced new 25% tariffs on US imports from Japan and South Korea, citing trade imbalances, set to take effect on August 1.
“We… have concluded that we must move away from these long-term, and very persistent, trade deficits engendered by [Korea’s and Japan’s] tariff, and non tariff, policies and trade barriers [sic],” Trump said via social media on Monday July 7.
This included screenshots of letters sent to Japanese Prime Minister Ishiba Shigeru and South Korean President Lee Jae-myung.
It would appear that a significant factor behind the new tariffs on the two Asian economic powerhouses was an attempt to curb transshipment. This is the practise of moving goods to an intermediate location, then on to a final destination, and is typically used to avoid tariffs.
“Goods transshipped to evade a higher tariff will be subject to that higher tariff,” the letters posted online said. “The 25% number is far less than what is needed to eliminate the trade deficit disparity we have with your country [sic].”
The newly announced 25% tariffs will be separate from additional sector-specific duties on key product categories, the letters added.
Trump also warned both countries against retaliating by increasing their own tariffs.
“If for any reason you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge [sic],” Trump said.
Both South Korea and Japan are significant exporters of steel to the US.
South Korea and Japan exported 231,455 tonnes and 62,163 tonnes of steel to the US respectively in June, representing 14.81% of the total volume of steel imported into the US that month, data from the International Trade Administration showed.
The new tariffs on South Korea and Japan announced on Monday come just two days before the end-date of Trump’s three-month pause on the reciprocal tariffs, so they have created confusion about what will happen with the US’ trading relationships on July 9.
The 90-day pause began on April 9, after the US president imposed reciprocal tariff rates for key US trading partners, with some levies as high as 50%. This was on April 2, or what Trump called “Liberation Day.”
Other trading partners could receive similar letters detailing new tariffs, with Trump reported to have told news reporters on July 4 that he would inform 10 to 12 nations a day over the next five days.
“[The tariffs] range in value from maybe 60% or 70% tariffs to 10% and 20% tariffs, but they’re going to be starting to go out sometime tomorrow,” Trump said on Friday. “We’ve done the final form, and it’s basically going to explain what the countries are going to be paying in tariffs.”
