Trump Admin Sending Signals to Trade Partners: Sarah Bianchi

Evercore ISI Head of US Public Policy & Political Strategy Research, and Former Deputy US Trade Representative Sarah Bianchi outlines the impacts of President Trump's tariffs on Japan and South Korea, as well as the impacts it might have on other nations.

President Donald Trump unveiled the first in a wave of promised letters that threaten to impose higher tariffs rates on key trading partners, including levies of 25% on goods from Japan and South Korea beginning Aug. 1.

Trump also announced 25% rates on Malaysia and Kazakhstan, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy. The nations were the first in what the president promised would be a flurry of unilateral warnings and trade deals announced on Monday, two days before agreements are due from trading partners facing his April 2 so-called reciprocal levies.

“Our relationship has been, unfortunately, far from Reciprocal,” Trump wrote in the letters.

White House Press Secretary Karoline Leavitt said there would be around a dozen countries that receive notifications about their tariffs Monday directly from the president. Additional letters will come in the coming days, she said.

Trump’s second-term rush to overhaul US trade policies has served as a steady source of uncertainty for markets, central bankers and executives trying to game out the effect on production, inventories, hiring, inflation and consumer demand — routine planning that’s hard enough without costs like tariffs that are on one day, off the next.

Many of the tariff rates, shared on his Truth Social platform, were largely in line with what Trump had already announced nations were likely to face. Some, including Laos and Myanmar, were slightly lower.

After a 90-day reprieve from his initial so-called “reciprocal” tariffs, Trump lowered those duties to 10% to allow time for negotiations. Few nations did so successfully in the short time given, though Trump’s latest move effectively offers another extension — set to be formalized in an executive order signed later Monday — that pushes the looming July 9 deadline until at least the beginning of August.

The delay is expected to benefit all nations facing so-call reciprocal tariffs, and not just those who are issued the presidential letters in the coming hours and days, Leavitt said.

Trump warned nations against retaliation over his latest gambit in his letters.

“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by will be added” to the threatened levels, Trump wrote.

He also said that the rates did not include any sectoral-specific tariffs that the administration had or would separately implement on goods imported in key industries. Both Japan and South Korea are major auto exporters, and are also facing US tariffs on steel.

Trump’s letters did offer them a way to meet his demands. No tariffs will be imposed if Japan or Korea, “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 wrote.

Asked why Trump had chosen to hit Japan and South Korea first, Leavitt said it was “the president’s prerogative.”

“Those are the countries he chose,” she added.

Leavitt said the administration is “close” to securing agreements with some other trading partners, adding that Trump “wants to ensure these are the best deals possible.”

Markets Fall

Following a rally to all-time highs last week, the S&P 500 Index lost 0.9%, while the Nasdaq 100 Index fell 0.8% at 12:36 p.m. in New York. The Cboe VIX Index sat near 18.10, while a gauge of expected volatility in technology stocks traded at the highest level in two weeks.

Japanese automakers’ American depository receipts fell to session lows after Trump’s announcement. Toyota ADRs fell 4.3% to session lows, while Honda’s fell 3.9% to session lows. The South African rand fell 1.5% to a session low.

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