Trump blasts out letters warning of ‘reciprocal’ tariffs as he delays deal deadline

WASHINGTON — President Trump publicly warned 14 nations Monday that they face “reciprocal” tariffs if they fail to reach a trade deal by Aug. 1 — delaying what had been a July 9 deadline for talks to wrap up.

Japan and South Korea were the first two nations targeted, with the president announcing that the major car and electronics-exporting nations each face a 25% duty if they fail to reach a trade deal with Washington this month.

“Please understand that the 25% is far less than what is needed to eliminate the Trade Deficit disparity we have with your Country,” Trump wrote to Japanese Prime Minister Ishiba Shigeru and South Korean President Lee Jae Myung.

“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.”

Also getting letters Monday were Bangladesh (facing a 35% rate), Bosnia and Herzegovina (30%), Cambodia (36%), Indonesia (32%), Kazakhstan (25%), Laos (40%), Malaysia (25%), Myanmar (40%),  Serbia (35%), South Africa (30%), Thailand (36%) and Tunisia (25%).

“If you wish to open you heretofore closed Trading Markets to the United States, and eliminate your Tariff, and Non Tariff Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter,” Trump wrote to the various national leaders.

“These Tariffs may be modified, upward or downward, depending on our relationship with your Country.”

Most of the new rates were similar to those rolled out by Trump April 2 — with the biggest change benefitting Cambodia, whose rate was lowered by 13 percentage points.

Japan and South Korea are America’s top trading partners outside of Canada, Mexico, China and the European Union and have had several rounds of preliminary talks with US officials. The two Asian nations combined account for about 8% of US trade.

Other nations subject to Monday’s announcement are important exporters of textiles and other cheaply manufactured goods.

Trump, 79, had hinted he would revise some looming rates downward, but his letters indicate leniency may be off the table following a series of strong economic, political and foreign-policy developments.

“We’ve spoken to everybody. We know every – it’s all done,” Trump told reporters at the White House Monday, when asked about prior claims by administration officials that 90 new trade deals would be negotiated. “I told you we will make some deals, but for the most part we’re going to send a letter.

“We’ve made a deal with the United Kingdom. We made a deal with China. We’re close to making a deal with India. Others we met with and we don’t think we’re going to be able to make a deal,” he added. “So we just send them a letter: If you want to play ball, this is what you have to pay.

“As far as I’m concerned, we’re done.”   

Trump’s new letters caused a slump in stock trading after major indices notched record highs last week. The Dow Jones Industrial Average closed Monday down 422 points, or 0.94%,

The Nasdaq fell 188 points (0.92%), while the S&P 500 dipped 49 points (0.79%).

White House press secretary Karoline Leavitt said Monday that Trump expects his counterparts to take the threat of higher tariffs seriously, despite now delaying their implementation twice. 

“They will take the letters seriously because they have taken the president seriously,” Leavitt said.

“That’s why the president’s phone, I can tell you, rings off the hook from world leaders all the time who are begging him to come to a deal.”

Leavitt added that “this administration is working hard to ensure those deals are in the best interests of the American people and this deal, again, is in the best interest of the American people.”

Only the UK, China and Vietnam so far have reached understandings with the US to avoid the “reciprocal” tariffs.

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Trump first revealed the sweeping “reciprocal” rates for global trading partners after applying 10% duties globally.

On April 9, he declared a 90-day pause on those rates to pursue negotiations before imposing the levies, roughly correlated by the Council of Economic Advisers to halve current US trade deficits with each country.

Trump threatened Friday to go as high as 70% with some nations holding out on tariff agreements — and warned early Monday the US would hammer nations aligned with the BRICS organization (Brazil, Russia, India, China and South Africa) with a 10% additional hit.

The looming rates apply to countries with which the US has trade deficits. Most countries, including those with which the US has surpluses, already have a new 10% baseline rate, roughly triple the prior average. 

The UK trade agreement, if finalized, will keep 10% baseline tariffs on most goods, while exempting most British-made cars, steel and aluminum from 25% levies that had been announced separately.

The US-China arrangement is still being ironed out before Aug. 10 to avoid snap back rates to 145% on the American side and 125% on the Chinese side.

The Vietnam deal includes a baseline 20% tariff rate as well as 40% on goods “transshipped” from China or other countries.

Under the USMCA trade deal from Trump’s first term, goods from Canada and Mexico have evaded higher duties, though 25% tariffs were added on items not previously part of that agreement.

The European Union currently risks a 50% rate without a deal.

“As we get to the smaller countries, we’re pretty much going to keep the tariffs the same,” Trump told reporters Friday.

“They’ll start to pay on Aug. 1. The money will start to come into the United States on Aug. 1 in pretty much all cases.”

Critics have predicted that American consumers will bear the brunt of the attempted trade realignment due to the price of goods surging, while Trump administration officials have touted the benefit of increased Treasury revenue.

As with the agreement with Vietnam, Monday’s letters cautioned that “goods transshipped to evade a higher Tariff will be subject to that higher Tariff.”