Donald Trump Targets Japan, South Korea With New 25% Import Tax

 Donald Trump Targets Japan, South Korea With New 25% Import Tax

T.T - Trump Tariff

1. Introduction: What’s Happening?

On July 7, 2025, former President Donald Trump announced a plan to impose 25 percent import tariffs on goods arriving from Japan and South Korea, beginning August 1. In his view, these new taxes are “reciprocal” a response to what he says are longstanding trade imbalances with both countries. This marks a major shift in trade policy that could affect global markets, U.S. relations with key Asian allies, and our everyday purchases.

2. Why Now? Understanding the Timing

Trump’s tariff move is part of his 2025 “reciprocal tariff” strategy, originally introduced on April 2 during what he dubbed “Liberation Day.” He initiated a 10% universal tariff on most imports, with steeper country-specific levies ranging from 24–50%.

• A 90‑day grace period was provided to allow for negotiation.

• That pause ends around July 9–July 8, depending on interpretation.

• With no major deal reached with Japan or Korea, Trump is triggering the higher 25% tariff now set to start August 1.

3. What Exactly is Being Taxed?

Trump’s announcement covers all goods imported from Japan and South Korea, with extra-heavy taxes on specific sectors:

• General products: 25%

• Automobiles and car parts: also 25%

• Steel and aluminum: rise to 50% under previous Section 232 trade orders.

He warns that any retaliatory tariffs from Tokyo or Seoul would be met with additional U.S. increases on top of the 25%.

4. Trump’s Rationale

a) Trade deficits

Trump argues the U.S. faces large trade deficits: around $69.4 billion with Japan and $66 billion with South Korea in 2024. a core reason behind calling for tariffs.

b) National security

He claims large trade imbalances threaten U.S. national security, and says reciprocal tariffs are a tool to rebalance trade flows and bolster manufacturing.

c) Leverage for negotiations

Trump suggests tariffs could be reduced or adjusted, possibly upward or downward, depending on trade deals. Passing these tariffs now adds pressure at a pivotal moment.

5. Market Reaction & Global Ramifications

Immediate market response

After the announcement, U.S. financial markets reacted swiftly:

• The S&P 500 dropped nearly 1%

• The Japanese yen and South Korean won each slid about 1.1% against the dollar.

Broader concerns

Economists worry that:

• Higher consumer prices may follow as importers pass costs on.

• Global growth might slow due to increased trade friction.

• Stronger tariffs could strain alliances, while impacting U.S. companies and consumers who rely on Japanese and Korean goods, from cars and electronics to appliances .

6. How Japan & South Korea Respond

Japan

Prime Minister Shigeru Ishiba called previous tariffs “extremely disappointing” and described this as a national crisis. Tokyo has also considered filing complaints with the WTO, exploring potential retaliatory tariffs, though Prime Minister Ishiba has urged a unified governmental strategy.

South Korea

Meanwhile, Seoul has stressed its support for a free and open trade order, with officials highlighting concerns about the possible negative impacts on South Korean exports . The government's position reflects both its security ties to the U.S. and economic anxieties.

7. Where Trade Talks Stand

Despite Trump aiming for “90 deals in 90 days,” progress has been limited. As negotiations near the deadline:

• Vietnam and the U.K. have reached deals: Vietnam with a 20% tariff, and the U.K. with a 10% tariff and selective exemptions.

• Talks with China are ongoing, focusing on rare earths and mutual tariff roll-backs.

• Canada resumed dialogue after reversing its digital tax.

• The EU, Japan, South Korea, India, and others remain in negotiations.

If Tokyo and Seoul fail to meet U.S. demands, they’ll face the full 25% tariffs and possibly more if they retaliate.

8. Potential Scenarios & Consequences

Scenario	Likely Outcome
Successful deal	Tariffs cut/reduced; trade balance shifts favorably
No deal, retaliation	Tensions escalate; potential full tariff war
Stalemate	Markets react negatively; U.S. consumers bear higher costs
WTO action	Legal battles, but often slow; tariffs remain for months/years

9. Impact on Everyday People

• U.S. Shoppers: Expect to pay more for cars, electronics, steel-based appliances.

• Manufacturers: Some might bring production back to the U.S., others may suffer supply chain disruptions and higher import costs.

• Workers in Japan & South Korea: Export-led economies may be slowed, risking job losses.

• Global trade tensions: Could lead to broader economic slowdown, potentially pushing global growth into lower gear.

10. Looking Ahead to August 1

With the August 1 start date less than a month away, key questions remain:

• Will Japan or Canada strike out-of-court deals?

• Will South Korea seek exemptions or adjustments?

• Can the EU step in to offset impacts?

• Could unpredictable global events shift dynamics before implementation?

Trump has framed this moment as a “last chance” for market-opening concessions. He’s signaling that failure to reach agreements will lead to full tariff enforcement and that retaliatory moves from allies will be met with harsher U.S. taxes