U.S. Extends Tariff Deadline, Imposes 25%-40% Rates on Imports from 15 Countries

The United States has extended the deadline for the implementation of reciprocal tariffs and negotiations with several countries, including Japan and South Korea, until August 1. This move comes as part of a broader strategy to address perceived trade imbalances. The tariffs, which will take effect on August 1, will impose a minimum tax rate of 25% on imports from these countries. Additionally, other nations such as Malaysia, Kazakhstan, and Tunisia will face a 25% tariff, while South Africa will be subject to a 30% tax rate. Laos and Myanmar will be hit with a 40% tariff. Other affected countries include Indonesia (32%), Bangladesh (35%), Thailand and Cambodia (36%), Bosnia and Herzegovina (30%), and Serbia (35%).

The extension of the deadline from July 9 to August 1 provides these countries with an additional three weeks to negotiate terms with the White House. The administration has emphasized that these tariffs do not include industry-specific tariffs that are already in place or being planned. Japan and South Korea, which are major targets of U.S. steel tariffs and significant automobile exporters, are among the first countries to receive these notices. The tariff rates announced are largely consistent with previous warnings issued by the administration. The remaining countries will receive their notifications in the coming days.

Despite the relatively small trade volumes with some of these countries, such as Myanmar, which had approximately 656 million dollars in imports from the U.S. in 2024, they are still included in this round of tariffs. The U.S. occasionally imports oil from Kazakhstan, with daily imports reaching 33,000 barrels in April 2024, the highest level in nearly two decades. When asked about the selection of Japan and South Korea as the initial targets, the administration stated that this was a decision made by the President. They also noted that negotiations with other trading partners are progressing, with the goal of securing the most favorable agreements.

This latest move is part of a series of significant changes in the U.S. global trade policy. Earlier in April, the administration announced plans to impose tariffs of up to 50% on over 50 trading partners, causing market volatility. A week later, the tariffs were reduced to 10%, providing a 90-day negotiation buffer. To date, only a few countries have successfully reached agreements. Progress has been made in negotiations with the United Kingdom, Vietnam, and China. The administration has also warned other nations against retaliatory measures, stating that any counter-tariffs would be met with equal or greater tariffs from the U.S.

The administration's actions come at a time when investors are already concerned about the U.S.'s growing debt. The recent passage of a 3.4 trillion dollar tax cut and spending bill has further strained the nation's finances. While the administration claims that foreign countries will bear the cost of these tariffs, the actual burden falls on U.S. importers, who must choose between reduced profits, increased consumer prices, or negotiating lower prices with suppliers. The U.S. Retail Federation has described the new tariffs as an effective tax increase on American businesses.

In addition to market and economic uncertainties, the administration's reciprocal tariffs face legal challenges. The tariffs are based on the International Emergency Economic Powers Act (IEEPA), which grants the President administrative authority to impose them. However, the U.S. Court of International Trade ruled on May 28 that most of these tariffs were implemented illegally and ordered a halt. The next day, an appeals court stayed the ruling, allowing the tariffs to remain in effect until a hearing on July 31. The administration has also invoked Section 232 of the Trade Expansion Act to impose separate tariffs on key industries such as automobiles, steel, and aluminum. Ongoing investigations under Section 232 may cover additional materials and consumer goods, serving as a backup plan in case the IEEPA tariffs are overturned by the courts.

Another critical point of contention is the Federal Reserve. Despite persistent pressure from the administration, including public criticism, the Fed has not lowered interest rates this year. One reason for this is the need to monitor whether the price increases caused by the tariffs will lead to longer-term inflationary pressures. If the administration had fully implemented the reciprocal tariffs on July 9, the average tariff on U.S. imports would have risen from less than 3% to approximately 20%, exacerbating the risks of economic growth and inflation. The administration's actions, combined with rising oil prices and immigration restrictions, are expected to drive up inflation in the coming months.