Trump tells Japan and South Korea their tariff rate: 25%

WASHINGTON – President Donald Trump began detailing the tariff rates he plans to impose on countries that have not reached trade agreements with the United States, telling South Korea and Japan on Monday they will face a 25% tax on their exports as of Aug. 1.

Markets dropped on the news, as investors seemed to view the rates as punishingly high for two of America’s closest allies and largest trading partners. The S&P 500 dropped as much as 1% before settling to trade roughly 0.8% lower for the day. Other major indexes also fell.

In nearly identical letters, Trump wrote to the president of South Korea and the prime minister of Japan that “we have decided to move forward with you, but only with more balanced, and fair, TRADE.”

“We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far,” Trump wrote.

The Trump administration is expected to send more letters to governments Monday detailing the tariff rates their exports will face as of Aug. 1. The president said earlier that he would send letters to 12 to 15 countries that have yet to reach agreements with the United States to lower their economic barriers. Administration officials have said Trump will also announce several trade deals this week.

Both Japan and South Korea are close American allies, but negotiations with them have been proceeding slower than those with some other countries. That’s in part because both countries have been undergoing their own elections, and because Trump is continuing to impose or threaten other tariffs on their major exports, including cars, steel and electronics. The Japanese and Korean governments have been hesitant to offer Trump concessions because of the chance of being hit with even higher levies on some of their most important industries.

In April, Trump announced stiff tariffs on nearly every trading partner, but then paused most of those levies until July 9 after turmoil in the stock and bond markets. For the last 90 days, the administration has been trying to reach trade pacts with more than a dozen countries that would lower economic barriers to U.S. exports and allow foreign governments to avoid some of the threatened tariffs.

So far, the United States has reached only two preliminary trade deals, with Britain and with Vietnam. They are scant on details and leave much to be worked out.

Similar deals could be announced in the coming days, including an initial trade framework with India. Countries that have so far agreed to trade deals, even preliminary handshake agreements, have qualified for lower tariff rates than what Trump threatened in April.

Earlier Monday, Treasury Secretary Scott Bessent said there would be “several announcements in the next 48 hours” on trade. With just days until the president’s July 9 deadline, the treasury secretary told CNBC that his “mailbox is full” with countries seeking to negotiate new deals, as the administration has “had a lot of people change their tune” before the deadline.

The threat of tariffs has been particularly galling to Japan and South Korea because Trump negotiated and signed trade deals with both countries in his first term. The first administration updated the United States-Korea Free Trade Agreement, which went into force in 2012. And Trump negotiated and signed a limited trade deal with Japan in 2019, which opened Japanese markets to some U.S. agriculture and established guidelines for the tech industry.

Japanese officials have extended the United States a number of trade offers, including pledging to purchase more American energy products and defense equipment, and to help the United States in areas like shipbuilding.

But negotiations with Japan stumbled over two main issues: that Japan was exporting far more automobiles to the United States than it imports and that the Japanese rice market remains relatively closed to American exporters. In a social media post last week, Trump called Japan “spoiled” and said the United States would be informing it of its new tariff rates.

Jake Colvin, president of the National Foreign Trade Council, which represents international businesses, said the question that America’s trading partners were facing was what they would get in return for lowering their own trade barriers.

While countries that have struck agreements have seen their tariffs pared back somewhat, no country has secured tariffs lower than 10%.

“If what they get in return is the U.S. permanently raising its tariff rate from whatever it was in 2024 to 10%, it’s going to be hard for some of our trading partners to swallow, and it could be politically perilous for them back home with their domestic constituents,” Colvin said.

This article originally appeared in The New York Times.