SEOUL, South Korea — Over the past three months, nations across the world tried to avoid new tariffs that would punish their economies by giving President Donald Trump something he might want.
Indonesia offered to buy $34 billion more in U.S. crops and fuels. Thailand proposed lowering many of its own trade barriers, and buying more U.S.-made planes. Japan was ready to buy more liquefied natural gas over the next two decades.
But as Trump’s self-imposed July 9 deadline approached, those entreaties made little difference. The 14 letters he posted online Monday, mostly aimed at countries in Asia, largely matched the rates set in April, before he backed off and gave dozens of countries 90 days to negotiate agreements that would satisfy the White House’s demand for more balanced trade.
“We have had years to discuss our Trading Relationship with Thailand, and have concluded that we must move away from these long-term, and very persistent, Trade Deficits engendered by Thailand’s Tariff, and Non-Tariff, Policies and Trade Barriers,” Trump wrote, swapping out only each country’s name in otherwise virtually identical missives.
That fresh volley has left countries large and small, nearly all of them long-standing allies of the United States, with profound questions about how to move forward with the world’s largest consumer economy when negotiations over trade conflicts are labored and deadlines are extended without warning.
Asian nations largely built their economies to supply the West. Trump’s announcements amount to a declaration that the relationship must fundamentally change, and reactions by regional players carry vast implications for the flow of goods and the contours of geopolitics in the years to come.
With Trump’s earlier tariffs on automobiles and steel as well as a fentanyl-related duty on China, the weighted average tariff for goods coming from Asia would rise to 27% — up from 4.8% in January — if all of the announced rates go into effect on Aug. 1, according to calculations by Morgan Stanley. That rate could rise even further if the United States follows through on its threats to place separate duties on pharmaceuticals and semiconductors.
Economists expect the tariffs, which Trump sees as a way to revive American manufacturing and add revenue to the federal budget, will reduce U.S. imports. American companies, as well as their business partners abroad, would suffer lower profit margins as the government levies are split between consumers, importers and exporters. Firms would be left with less money to pay wages and invest in their growth.
Facing Trump’s accusations of unfair trade practices, some countries on his Monday mailing list have few bargaining chips. South Korea, for example, 13 years ago inaugurated a free-trade agreement with the United States that has reduced nearly all tariffs between the two countries to zero.
South Korea’s newly elected president, Lee Jae Myung, tried to come up with offers, such as cooperation in helping the United States rebuild its shipbuilding industry. He sent both his top trade negotiator and his national security adviser over the past few days to meet with Trump administration officials to try to hash out a deal.
Nevertheless, South Korea was met with a 25% tariff, the same as the one that was paused in April. Although all the new tariffs will not go into effect until Aug. 1, creating a window to de-escalate, it remains unclear what could persuade Trump to relent.
“We are doing our best to bring about a result mutually beneficial to both sides, but we have been unable to establish what each side exactly wanted from the other side,” Lee said on Thursday.
In several cases, leaders in Asia expressed exasperation that they were back to square one even while actively engaging in talks. A Thai delegation had met last week with Jamieson Greer, the U.S. trade representative, and a top official at the Treasury Department, only to receive a 36% rate in Trump’s Monday barrage.
“I think it’s a bit of a contradiction,” said Phumtham Wechayachai, Thailand’s acting prime minister. “We negotiated with the trade representatives, the appointed intermediary to negotiate. However, the White House, the related parties, they sent out the letter.”
The bewilderment was not limited to Asia. Goods from South Africa will face a 30% U.S. tariff, according to a letter from Trump to President Cyril Ramaphosa. In a statement Monday, the South African leader said that the tariff rate was based on a “contested interpretation” of the trade balance between his country and the United States. Around three-quarters of U.S. goods are sold in South Africa with zero tariffs, Ramaphosa noted.
Ramaphosa has sought reassurances that his country could rely on the United States as a market for its goods and an investor in its economy, which is suffering from high unemployment and low growth. But after receiving Trump’s letter, Ramaphosa urged his trade negotiators and South African companies “to accelerate their diversification efforts,” reducing reliance on U.S. trade.
There is one major clue about what Trump might want in the deal he struck last week with Vietnam. That country has agreed in principle to a 40% tariff on any goods that flow across its borders from China, which has happened with increasing frequency as the United States has ramped up barriers to goods coming from China directly.
A similar clause appears in all of the letters sent Monday, declaring that “goods transshipped to evade a higher tariff will be subject to that higher tariff.” Effectively, the Trump administration is forcing nations to choose between China and the world’s biggest consumer economy, the United States. It’s not an easy decision to make, or to follow through on.
Take semiconductors, an essential component for everything from iPhones to automobiles. Taiwanese and South Korean companies have dominated chip production for decades, but the supply chain is complex and specialized, with materials and equipment from Japan and testing laboratories in Malaysia. They now have factories in China and sell many of their chips there — an arrangement that has upset Washington, which wants to slow China’s progress on the development of artificial intelligence.
“The U.S. does not actually want zero tariffs or a free-trade agreement with these countries,” said Hsien-Ming Lien, president of the Chung-Hua Institution for Economic Research, a think tank in Taipei, Taiwan. “What Trump really wants to do is to build up a manufacturing supply chain which has as little influence from China as possible.”