United States President Donald Trump has intensified his trade war by imposing steep tariffs on more than a dozen countries, including key US allies Japan and South Korea. Trump’s latest trade threats put 14 countries on notice that they will face tariffs of 25 to 40 percent from August 1 unless they take more US exports and boost manufacturing in the US.
In nearly identical letters to the countries’ leaders, Trump said the US had “decided to move forward” with their relationship, but “only with more balanced, and fair, TRADE”.
Trump warned that any retaliatory taxes would be met with even higher tariffs, but left the door open to relief from the measures for countries that ease trade barriers. “If you wish to open your heretofore closed Trading Markets to the United States, eliminate your tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps consider an adjustment to this letter,” Trump said.
The countries facing tariffs include:
- Laos and Myanmar: 40% tariff rate
- Japan, South Korea, Malaysia, Kazakhstan, and Tunisia: 25% tariff rate
- Cambodia and Thailand: 36% tariff rate
- Serbia and Bangladesh: 35% tariff rate
- South Africa and Bosnia and Herzegovina: 30% tariff rate
- Indonesia: 32% tariff rate
These countries, many of which have highly export-reliant economies, had previously been subject to a baseline tariff of 10%. Trump’s steepest tariffs would apply to Laos and Myanmar, which are both facing duties of 40%.
Japanese Prime Minister Shigeru Ishiba called the tariff on his country “truly regrettable”, but said the Japanese side would continue negotiations towards a mutually beneficial agreement. South Korea’s Ministry of Trade, Industry and Energy said in a statement that it would step up negotiations ahead of the August 1 deadline to “reach a mutually beneficial negotiation result so as to swiftly address uncertainties stemming from tariffs”.
Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore Business School, said Asian countries are limited in their ability to present a united front in the face of Trump’s threats due to their varying trade profiles and geopolitical interests. “It is not possible for these countries, even for a formal pact like ASEAN, to act in a coordinated manner. It’s likely to be to each country on its own,” Loh said.
The US stock market dipped sharply on Trump’s latest tariff threats, with the benchmark S&P 500 falling 0.8% and the tech-heavy Nasdaq Composite dropping 0.9%. However, Asia’s major stock markets shrugged off the uncertainty, with Hong Kong’s Hang Seng Index up about 0.8%, South Korea’s KOSPI up about 1.4%, and Japan’s Nikkei 225 up about 0.2%.
Experts believe that countries in the region will feel pressure to make concessions to Trump to avoid damage to their economies. “On balance for Asian countries, not giving concessions will turn out more harmful than playing along with the US,” Loh said. Calvin Cheng, director of the economics and trade programme at the Institute of Strategic and International Studies (ISIS) in Kuala Lumpur, Malaysia, said many governments may be resigned to higher taxes on their exports going forward.