United States President, Donald Trump has escalated trade tensions with two of America’s key economic allies, Japan and South Korea, by dispatching formal letters announcing a new 25% tariff on imports from both nations, set to take effect August 1.
The letters, which Trump posted Monday on Truth Social, highlight his longstanding frustration with America’s trade imbalance with both countries, where the U.S. imports significantly more than it exports.
Trump emphasized that the tariff move is in response to what he views as unfair practices that hinder American products from gaining access to Japanese and South Korean markets.
“Please understand that the 25% number is far less than what is needed to eliminate the Trade Deficit disparity we have with your Country,” he wrote in each letter.
Trump urged Japanese and South Korean companies to move production to the United States if they want to sidestep the tariffs altogether.
“There will be no tariff” if South Korea or Japan or “companies within your Country, decide to build or manufacture product within the United States and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely—In other words, in a matter of weeks,” he added.
He also warned of potential tariff hikes if either country retaliates by imposing their own levies on American goods.
“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% that we charge,” Trump stated.
Japan and South Korea currently rank as the sixth- and seventh-largest trading partners of the U.S., respectively.
According to U.S. Commerce Department data, they exported a combined $280 billion worth of goods to the U.S. last year, while importing only $145 billion in American products.
The threat of increased tariffs has sparked concern among U.S. consumers and investors, particularly given the heavy reliance on Japanese and South Korean imports such as automobiles, semiconductor components, pharmaceuticals, and industrial machinery.
Trump has previously singled out many of these sectors for additional tariffs.
Despite assurances that these new general tariffs will remain separate from any existing or future sector-specific levies, stocks of major Japanese automakers took a hit.
Shares of Nissan, listed in the U.S., plunged over 7%, while Toyota and Honda also saw declines of around 4%.
These drops reflect investor anxiety over further potential tariff hikes, especially if Trump follows through on threats to penalize retaliatory actions from either nation.
Trump concluded his message with a blend of warning and reassurance, “These Tariffs may be modified, upward or downward, depending on our relationship with your Country. You will never be disappointed with The United States of America.”
Markets reacted sharply to the announcement, accelerating an already downward trend. The Dow fell by as much as 530 points (1.2%), while the S&P 500 slipped 0.87% and the Nasdaq declined 0.9%.
Trump has hinted that more such letters are on the way. He previously indicated his plan to send 10 to 12 letters per day to foreign leaders, giving them until July 9 at 12:01 a.m. ET to make trade concessions before facing higher U.S. tariffs. That date marks the expiration of a temporary pause on reciprocal tariffs introduced in April, during which affected nations have been subject to a minimum 10% import duty.
Notably, in April, Japan was slated for a 24% tariff and South Korea for a 25% rate. A White House official clarified that these rates will remain distinct from sectoral tariffs like the 25% duty already applied to foreign vehicles, meaning they will not be compounded.
As the deadline nears, global trade observers are watching closely to see whether other countries will negotiate to avoid penalties, or brace for the impact of heightened economic pressure from Washington.