On Monday, President Trump said that South Korea and Japan would be subject to a 25 percent tax on their exports starting on August 1st, as he started outlining the tariff rates he intends to apply to nations who have not signed trade deals with the US.
The revelation caused markets to plummet because investors appeared to think the rates were too high for two of America’s biggest trading partners and closest allies. Before settling to trade about 0.8 percent lower for the day, the S&P 500 fell as much as 1 percent. Other other indexes declined as well.
Mr. Trump wrote to the prime minister of Japan and the president of South Korea in roughly identical letters, saying, “We have decided to move forward with you, but only with more balanced and fair TRADE.”
The president wrote, “We cordially invite you to join us in the remarkable economy of the United States, the Number One Market in the World, by far.”
On Monday, the Trump administration is anticipated to write additional letters to governments outlining the tariff rates that will apply to their exports starting on August 1. Prior to this, the president announced that he would write to 12 to 15 nations who have not yet reached deals with the US to reduce their economic obstacles. According to administration sources, this week will see Mr. Trump announce a number of trade agreements.
Although South Korea and Japan are also staunch allies of the United States, talks with them have been moving more slowly than with some other nations. This is partly due to the fact that both nations have been holding elections of their own, and Mr. Trump is still threatening or enforcing additional tariffs on their main exports, which include electronics, steel, and automobiles. The possibility of facing even greater taxes on some of their most vital businesses has made the governments of Korea and Japan reluctant to make concessions to Trump.
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