Washington: US President Donald Trump on Monday placed a 25 per cent tax on goods imported from Japan and South Korea, citing persistent trade imbalances with the two crucial US allies in Asia.
Trump provided notice of the tariffs to begin on August 1 by posting letters on Truth Social that were addressed to the leaders of both countries. The letters warned both countries to not retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25 per cent that we charge,” Trump wrote in the letters to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung.
The letters were not the final word from Trump on tariffs, so much as another episode in a global economic drama in which the US president has placed himself at the centre. His moves have raised fears that economic growth will slow to a muddle, if not make the US and other nations more vulnerable to a recession. But Trump is confident that tariffs are necessary to bring back domestic manufacturing and fund the tax cuts he signed into law last Friday.
The S&P 500 stock index was down nearly 1 per cent in Monday afternoon trading, while the interest charged on the 10-year US Treasury had increased to nearly 4.39 per cent, a figure that could translate into elevated rates for mortgages and auto loans.
Trump has declared an economic emergency to unilaterally impose the taxes, suggesting they are remedies for past trade deficits even though many US consumers have come to value autos, electronics and other goods from Japan and
South Korea.