U.S. to Issue Tariff Letters Monday, Japan and South Korea Face 25% Tariff

The United States has confirmed its intention to issue tariff letters within the next 48 hours, as new trade proposals are expected to arrive ahead of a Wednesday deadline. This announcement comes as the Trump administration intensifies its efforts to secure favorable trade agreements with its partners. The tariff letters, which will outline the specific rates that trading partners will face on imports to the U.S., are set to be sent out at 12:00 p.m. EST on Monday. This move is part of a broader strategy to pressure trading partners into finalizing deals before the deadline, or else face potential tariff hikes.

The administration's decision to issue these letters is a significant step in its trade policy, as it signals a more aggressive stance towards negotiating trade agreements. The letters are expected to cover a range of goods and services, with the potential for tariffs to be imposed on a variety of imports. This move is likely to have a significant impact on global trade, as it could lead to retaliatory measures from affected countries.

The timing of this announcement is also noteworthy, as it comes just days before the July 9 deadline for the U.S.'s trade partners to negotiate deals. This deadline was initially set by President Trump as part of his administration's efforts to renegotiate trade agreements and reduce the U.S.'s trade deficit. The administration has been clear that it is willing to impose tariffs on a wide range of goods if necessary, and the issuance of these letters is a clear indication of its resolve.

In a social media post, President Trump announced that starting August 1, Japan and South Korea will face a 25% tariff. Japan’s rate is one percentage point higher than the one proposed in April. The tariff of South Korea is unchanged. Trump further noted that whenever any country raises its tariffs, the U.S. would add the percentage to the existing 25%.

There are only two deals closed to date, namely with the United Kingdom and Vietnam. The remaining negotiations continue to be intense, with Washington demanding universal agreements or heavy tariffs. The ongoing Biden-era digital services tax dispute with Canada seems to have been settled, with Canada opting to withdraw the tax. Trade talks between the two nations are now in full swing and sharp focus, with mid-July set as the goal for finalizing a new deal.

In the European Union, there is a proposed acceptance of a blanket 10% tariff rate on most exports, but with carve-outs on a few sectors. The EU has not yet confirmed the final terms. Vietnam has already signed an amended agreement. This will subject the country to a 20% tariff compared to the 46% that was initially proposed. However, the U.S. will add a 40% tariff on goods transshipped through Vietnam to 3rd countries, e.g., China.

Malaysia, which had faced a 24% tariff in April, faces a 25% levy. Kazakhstan saw tariffs reduced to 25% down from 27%, and Laos and Myanmar were also reduced, now paying 40% tariffs. The rate of South Africa was pegged at 30%. Trump reiterated imposing an additional tariff of 10% on countries that support BRICS policies that oppose American interests. “There will be no exceptions,” he wrote.

Tensions with China seem to be thawing as well. The U.S. has also lifted some export controls, such as chip design software and ethane. Bessent said he plans to meet with his Chinese counterpart in the weeks ahead. Howard Lutnick, Secretary of Commerce, standing alongside Trump at a recent event, assured the media that even though the tariff agreements should be finalized by July 9, the rates will not be assumed until August 1. The administration is leveraging the gap to finalize or send final notices.

The White House frames the tariff measures as essential to rebalancing trade relationships and restoring American leverage. Trump said on Sunday that most countries would receive “a letter or a deal” by July 9. The administration's decision to issue tariff letters and impose new tariffs on imports from Japan and South Korea is a clear indication of its commitment to renegotiating trade agreements and reducing the U.S.'s trade deficit. However, it remains to be seen how trading partners will respond to these moves, and whether they will be able to reach agreements that satisfy the administration's demands. The coming days and weeks will be crucial in determining the outcome of these negotiations and the future of U.S. trade policy.