US President Donald Trump escalated his global trade war by imposing 25% tariffs on all imports from key Asian allies Japan and South Korea, effective 1 August, according to letters released via his Truth Social platform.
The move sent immediate shockwaves through Wall Street, with the S&P 500 Index falling 0.8%, though Asian markets displayed greater resilience as Japan’s Nikkei recouped early losses while South Korean stocks surged over 1%.
Trump simultaneously granted trading partners a partial reprieve, extending his original 9 July negotiation deadline to 1 August via executive order.
I would say firm, but not 100% firm. If they call up and they say we’d like to do something a different way, we’re going to be open to that.
The new tariffs will not compound with existing sectoral levies on automobiles or steel, offering limited relief.
Japan’s Prime Minister Shigeru Ishiba confirmed receiving the US proposal, noting: “depending on Japan’s response, the content of the letter could be revised,” South Korea interpreted the delay as an extended grace period, vowing intensified talks.
Thailand expressed confidence in securing competitive terms, while Malaysia’s trade ministry advocated “constructive engagement” despite acknowledging US concerns over trade imbalances.
Wider impact and retaliation risks
The tariff expansion spans other 12 nations with rates escalating sharply: Bangladesh (35%), Bosnia and Herzegovina (30%), Cambodia (36%), Indonesia (32%), Kazakhstan (25%), Laos (40%), Malaysia (25%), Myanmar (40%), Serbia (35%), South Africa (30%), Thailand (36%), and Tunisia (25%).
Bangladesh’s garment industry employing 4 million people and generating 80% of export earnings faces existential threat. Industry leader Mahmud Hasan Khan called the 35% rate “absolutely shocking news.” South African President Cyril Ramaphosa also rejected the 30% tariff as unjustified, noting 77% of US goods enter South Africa duty-free.
Meanwhile, the European Union remains exempt from tariff letters as negotiations intensify ahead of the new deadline. European Commission spokesperson Olof Gill confirmed the bloc still aims for a 9 July agreement featuring a 10% baseline tariff with sectoral exemptions for aircraft and spirits.
However, internal rifts persist, with Germany and Italy favouring rapid acceptance while France and Ireland demand firmer resistance.
BRICS confrontation
Trump simultaneously threatened BRICS nations meeting in Rio de Janeiro with an additional 10% tariff if they adopt “anti-American policies”, an undefined term historically linked to efforts challenging US dollar dominance.
BRICS leaders had earlier condemned “indiscriminate rising of tariffs” in their summit declaration, warning they “distort trade and are inconsistent with WTO rules.”
US Treasury Secretary Scott Bessent noted his inbox overflowed with last-minute offers, signalling frantic diplomatic efforts.
We’ve had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals.
With only the UK, Vietnam, and China securing limited agreements thus far, the global trading system faces its most profound stress test in decades.
