President Donald Trump’s tariff policies have caused widespread confusion and roiled global markets since he announced a significant tariff increase in April. The tariffs, which Trump calls “reciprocal,” were initially delayed for 90 days to allow for negotiations. However, that deadline has now been pushed back to August 1.
Japan, South Korea, and 12 other nations were notified this week that they will face tariffs of at least 25% starting from August unless they can quickly negotiate deals. Trump also threatened to increase tariffs if any countries retaliate or try to circumvent them by sending goods through other nations. Fourteen countries have been given notice this week of the looming tariffs increase, with more expected to follow in the coming days.
Tariffs range from 25-40%, with some of the harshest levies imposed on developing nations in Southeast Asia, including 32% for Indonesia, 36% for Cambodia and Thailand, and 40% on Laos and Myanmar. Despite the 90-day pause granted in April to allow time to broker trade deals, only two deals have been reached so far.
Tariff uncertainties impact global markets
The first, signed on May 8, includes a 10% tariff on most UK goods, including cars, and zero tariffs for steel and aluminum. A second deal last week sets a 20% tariff for much of Vietnam’s exports, although the full details are unclear with no text released. US stocks have fallen in response to the tariff announcements, with the S&P 500 closing down about 0.8%, its biggest drop in three weeks.
US-listed shares of Japanese automotive companies also fell, with Toyota Motor closing down 4% and Honda Motor off by 3.9%. Asian countries have been hit with some of the most punitive tariffs due to what Trump claims is their unfair trade deficits. However, analysts question the rationale behind these decisions and suggest that Trump may be targeting countries that receive substantial investment from China.
White House Press Secretary Karoline Leavitt told a press briefing this week that more countries would be informed of looming tariffs this week. Trump is “close” on other deals, she added, but “wants to ensure these are the best deals possible.” However, the minimal progress on deals to date highlights the reality that trade agreements are time-consuming and complicated.