Trump Announces New Tariffs Up To 70% On Exports From August 1

U.S. President Donald Trump announced that his administration would begin notifying trading partners of new tariffs on their exports, effective from August 1. This announcement came as a surprise to Wall Street, which had been anticipating a more positive outcome, often referred to as a "TACO Tuesday." Trump's statement that tariffs could be as high as 70% led to a significant drop in market sentiment.

Trump indicated that approximately 10 to 12 letters would be sent out on Friday, with additional notifications to follow in the coming days. He emphasized that by July 9, all countries would be fully covered by these new tariffs, which would range from 10% to 70%. This move aligns with Trump's previous threats and his preference for straightforward negotiations over complex deals. The highest tariff rate mentioned, 70%, is notably higher than the initial 50% maximum tariff outlined in April.

The new tariff range, if implemented, would surpass any previous levies announced by Trump. The president did not specify which countries would be subject to these tariffs or whether certain goods would face higher tax rates. He also stated that the tariffs would start being collected on August 1, with the funds going to the United States. Typically, tariffs are paid by the importer or an intermediary, but the ultimate cost is often absorbed by profit margins or the end consumer.

The announcement led to a decline in stocks across Asia and Europe, as well as a drop in the dollar's value. U.S. equity and Treasury markets were closed for the Fourth of July holiday, but the impact was felt globally. The potential inflationary effects of these tariffs have raised concerns among some Federal Reserve officials, who are wary of cutting interest rates due to the uncertainty surrounding tariff-driven price increases.

Trump's threat to impose tariffs if countries fail to reach deals by the July 9 deadline has increased the pressure on trading partners to secure agreements. He initially announced higher "reciprocal" tariffs in April but paused them for 90 days to allow for negotiations. During this period, a 10% tariff rate was in place.

The administration has already reached deals with the UK and Vietnam, and agreed to truces with China, which saw both countries ease tit-for-tat tariffs and lower export controls. However, many major trading partners, including Japan, South Korea, and the European Union, are still working to finalize their agreements. South Korea's top trade official is scheduled to visit the U.S. this weekend with fresh proposals in a last-minute effort to avoid higher tariffs.

Trump has expressed optimism about reaching an agreement with India but has been critical of Japan, describing it as a difficult negotiating partner. He suggested that Japan should be forced to pay tariffs as high as 30% or 35%. The U.S. Treasury Secretary, Scott Bessent, stated that the final decision on extending the deadline would be made by Trump, who would determine whether countries are negotiating in good faith.