Global Trade War Update: In a significant development over the United States-initiated trade tariffs, US President Donald Trump on Monday announced a newly-set duty of 25 per cent on Japan and South Korea each. In similarly worded letters sent to officials in both Asian nations, the US President said he will be imposing the trade tariffs while warning of an extra 10 per cent on each of the BRICS grouping of nations–which includes India.
The US President said he would be sending out letters announcing updates on tariffs to specific countries starting at noon on Monday (US time).
The development comes at a time when the US President is negotiating trade talks with dozens of countries. Last week, an Indian delegation returned home after week-long discussions with their American counterparts. However, a potential US-India trade deal is yet to be finalised.
Trump imposes 25% duty each on Japan and South Korea, with effect from August 1
The new rates, as mentioned in Trump’s said letters to the nations, will be imposed with effect from August 1.
Extra 10% tariff on BRICS nations
Trump mentioned additional 10 per cent tariffs on BRICS nations in his post on Truth Social.
The development comes at a time when the 11-nation grouping known as BRICS–including US allies Brazil, Saudi Arabia and Indonesia–is approaching the end of a two-day summit in Rio de Janeiro, and a day after BRICS leaders described Trump’s back-and-forth tariffs as “indiscriminate”.
Latest US tariffs on Japan and South Korea not much different from April 2 announcement
Notably, Trump’s latest rates for Japan and South Korea are within 100 bps of the duties announced in his “reciprocal” April 2 tariffs–when a 24 per cent duty was assigned to Japanese and 25 per cent on South Korean products.
Here are the precise contents of each letter:
- The US desires to continue working with each country, despite the “significant trade deficit”
- Its relationship has been “far from reciprocal”
- Tariffs go into effect August 1 on all products sent into the US
- These are “separate from all Sectoral Tariffs”
- “Goods transshipped to evade a higher Tariff will be subject to that higher Tariff”
- The US will “do everything possible to get approvals quickly, professionally, and routinely” to manufacture in the US instead
- Countries deciding to raise their tariffs will get a number added to the 25 per cent that the US currently charges
- If they wish to “eliminate your Tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter”
- These tariffs will be modified depending on their relationship with the US
Wall Street Update | How Dow Jones fared
Wall Street benchmarks extended intraday losses after the news, with the Dow Jones Industrial Average (DJIA) falling as much as 557 points, or 1.2 per cent, to 44,271.5. The S&P 500, the other American blue-chip index, tumbled 64.1 points, or 1.0 per cent, to hit an intraday low of 6,215.3.