President Donald Trump has increased pressure on US business partners, sending letters to heads from various countries, informing them of their new rates. But at the same time, Trump relieved the pressure by signing an executive action on Monday to extend the date of all “reciprocal” tariffs except China for 1 August.
These “reciprocal” tariffs were expected to come into force on Wednesday. In some cases, letters sent by Trump specify new “reciprocal” customs rights rates that are higher or lower than April levels.
Trump was not definitive when asked if the new August 1 period was “firm” before a White House dinner on Monday night. “I would say it’s firm, but not 100% firm. If they call and say they would like to do something differently, we will be open to it.”
Japan Prime Minister Shigero Ishiba and South Korea President Lee Jae-Myung were the first recipients of Trump’s letters.
According to letters, both countries will be subject to a 25% rate from August 1, but both nations said Tuesday that they want to start new talks with the US, with Japan saying they are working for a trade agreement.
Trump announced the sending of letters similar to Malaysia, Kazakhstan, South Africa, Myanmar and Laos, informing their leaders of new customs rates that can reach 40%.
At the end of the day, he published seven new letters sent to the leaders of Tunisia, Bosnia and Herzegovina (who is expected to reach a 30%tariff), Indonesia, Bangladesh, Serbia, Cambodia and Thailand, totaling 14 letters delivered on Monday.
In letters, Trump said he has a particular problem with the commercial deficits that the United States has with these countries, which means that America buys more goods from these countries compared to the amount that US companies export to them. Trump also stated that the tariffs would be established in response to other policies that they consider to be preventing the sale of American products abroad.
The US President encouraged countries’ leaders to manufacture products in the United States to avoid tariffs.
The initial term of July 9 for countries to make agreements or face the threat of higher rates. This date marks the end of the break in “reciprocal” tariffs, which briefly entered into force in April. Since then, affected countries have faced a minimum rate of 10%.
In all 14 letters, Trump threatened to increase tariffs even more than the rates specified if a country retaliated against the United States with its own tariffs. Trump stated that these rates would be “separated from all sectoral tariffs,” which means, for example, that the new fare will not be applied over the current 25%car tariff, the White House confirmed. This would also apply to any specific sector -specific tariffs, a White House employee said.
Despite the many business problems Trump has transmitted with the European Union, leading him to threaten with higher rates on several occasions, the commercial block does not seem to have received a letter from him.
“We will not comment on letters we have not received,” Olof Gill, spokesman for the European Commission told journalists on Monday afternoon.
“My understanding is that we can now expect an extension of the current status quo until August 1 to give the EU and the US more time to reach a mutually beneficial agreement that works for both parties,” said Simon Harris, Irish Foreign and Trade Minister, in a statement on Monday.
Countries respond
Many of the countries that received the letters have favorably welcomed the deadline and seem eager to pursue discussions with the United States to achieve better agreements.
Ishiba, from Japan, summoned a working group of the cabinet on Tuesday morning and expressed the profound “weighing Tokyo because the US government has taxable tariffs and announced plans to increase rates.” Ishiba said the country will continue negotiations with the United States to reach a bilateral trade agreement that benefits both countries.
The South Korean Ministry of Finance stated in a statement that it would closely follow the evolution of the situation, but warned that if market fluctuations became “excessive,” the government “would” take immediate and courageous measures according to its contingency plans, “although it has not immediately detailed what these measures could imply.
Thailand is still confronted at a rate of 36%, but finance minister Pichai Chunhavajira told reporters on Tuesday that he is confident that Bangkok will negotiate a more competitive rate, having submitted a proposal to the US “good faith”.
Malaysia, which faces a customs of 25%, also plans to “continue discussions” with the US to reach a “balanced and mutually beneficial trade agreement,” the Ministry of Commerce said Tuesday, according to Reuters.
South Africa President Cyril Ramaphosa said diplomatic efforts would continue, but asked local companies to accelerate diversification efforts in an X. Ramaphosa publication also said the US based on the 30% tariff rate for South Africa on a “inaccurate representation” of commercial data.
CNN contacted the Ministries of Foreign Affairs of Indonesia, Cambodia, Myanmar and Cazakhistan, as well as the Bangladesh Ministry of Commerce, for comments.
What is at stake
Last year, the US collectively bought $ 465 billion from goods from the 14 countries that received letters on Monday, according to US Department of Trade Department data. Japan and South Korea, the sixth and seventh largest commercial partners in the United States, represented 60% of that amount, sending a total of $ 280 billion from goods to the United States last year.
The prospect of increasing customs rights to goods may translate into higher prices for US consumers. Among the main products that the United States imports from South Korea and Japan, for example, are cars, car parts, semiconductors, pharmaceutical products and machinery. Trump has applied or threatened to apply specific customs rights to many of these products.
In April, Japan was subject to a 24%rate, while South Korea was subject to a 25%rate. Now both face the same rate of 25%.
Although other countries send fewer commodities to the US compared to Japan and South Korea, in many cases, they are among the main foreign sources of goods.
For example, South Africa, which is expected to be subject to 30%customs rights, was responsible for about half of platinum that the US imported from other countries last year and was the main foreign supplier.
Malaysia, which is expected to be subject to a 24% tariff, against the 25% rate announced by Trump in April, was the second largest source of semiconductors sent to the US last year, with Americans bought $ 18 billion.
However, Bangladesh, Indonesia and Cambodia are the main centers of clothing and accessories manufacture.
Trump’s letter to Cambodia Prime Minister threatened with a 36%rate of 36%, 13 percentage points below that was in force in April, before being suspended.
Falling actions
The actions fell in the middle of the day after Trump announced the first batch of letters and continued to fall when Trump announced rate rates of 25% to 40% over countries such as Myanmar, Malaysia, Kazakhstan, Laos and South Africa.
Although Trump has stated that each country’s specific tariffs will not be accumulated with sectoral tariffs, the actions of car companies that have a strong presence of production in Japan and South Korea have fallen sharply. The shares of leading Japanese manufacturers of Toyota, Nissan and Honda, quoted in the US, fell 4%, 7.16%and 3.86%, respectively.
These falls, however, may reflect the increase in Trump’s likelihood potentially increase tariffs on the automobiles of both countries, if they retaliate against 25%general rates if they enter into force, applying higher rates to US products.
“These rates can be modified, up or down, depending on our relationship,” Trump concluded in the cards before signing.
Dow closed down 422 points, or 0.94%. The S&P 500 fell 0.79% and Nasdaq Composite, of high technology, fell 0.92%. The three main rates recorded their worst day in about three weeks. However, Asian bags started Tuesday without changes.
Yoonjung Seo, Junko Ogura, Kocha Olarn and Aishwarya S. Iyer of CNN contributed to this report
