Updated July 7, 2025 at 1:06 PM EDT
President Trump today posted letters to the leaders of Japan and South Korea, informing them that he plans to impose 25% tariffs on all of their exports to the U.S. beginning Aug. 1.
In a letter posted to social media, Trump informed South Korean President Lee Jae-myung that "the United States of America has agreed to continue working with Korea, despite having a significant Trade Deficit with your great Country." He later added, "Our relationship has been, unfortunately, far from Reciprocal," as justification for the new tariff rates.
He posted a separate, but nearly identical letter, to Japanese Prime Minister Ishiba Shigeru, likewise informing him of a 25% tariff.
While Trump often frames tariffs as being paid by other countries — in the South Korea letter, he informs Lee that "we will charge Korea" a 25% tariff — that is not the case. Tariffs are taxes paid to the U.S. government by companies in the U.S. for imported goods or components. As a result, the cost of tariffs is often passed on to consumers in the form of higher prices.
Trump has regularly said that these rates were meant as retaliation against other countries' protectionist measures.
The new tariff letters are the result of months of uncertainty, stemming from an April 2 executive order in which Trump imposed tariffs on nearly every country worldwide. Trump announced those tariffs with a Rose Garden event, calling April 2 "Liberation Day." The new taxes included high rates on goods from some of America's biggest trading partners, such as Vietnam and Japan.
A week later, after stock markets plummeted and economists warned of dire consequences, Trump announced he was lowering the tariffs to 10% for 90 days. After that "pause," as he called it, he set tariffs to jump back to those "Liberation Day" levels on Wednesday, July 9.
In the interim, the president repeatedly said he would make tariff deals with individual countries before July 9, at one point promising "90 deals in 90 days." Only two deals have been announced to date, however, with the UK in early June and with Vietnam on July 2.
The newly announced tariff rates will not only increase costs for South Korean and Japanese goods, but will put their tariff rates at or near where Trump set those countries' rates on April 2, when South Korea's rate was set at 25% and Japan's was at 24%.
Meanwhile, it remains unclear how firm that July 9 deadline is for other countries — for example, whether tariffs on countries without deals or letters by then will snap back up to their "Liberation Day" levels. Treasury Secretary Scott Bessent had at one point suggested tariff deals with individual countries might more realistically be done by Labor Day.
Imposing tariffs this high and this quickly — not to mention threatening and announcing them via social media — represents a highly unorthodox and potentially risky approach to trade. Trump prefers bilateral trade deals over the multilateral deals that past administrations pursued, like the Trans Pacific Partnership, a trade agreement that would have included 12 Asia-Pacific countries. That deal was complex, the result of nearly a decade of negotiation — talks started in 2008, in the George W. Bush administration, and continued through Barack Obama's two terms to when Trump took office in 2017, when he pulled the U.S. out of TPP talks.
That means Trump's tariff deals also happen much more quickly than many past U.S. trade dealings, with the president using the size of the U.S. economy to pressure other countries to come to agreements. He also focuses on bilateral trade deficits as a measure of how positive a trade relationship is, though mainstream economists believe it to be a poor measure.
The potential benefits of these tariff deals include reducing other countries' trade barriers, like tariffs and other regulations, giving U.S. exporters more consumers to sell to.
But the costs are real, and will be paid upfront by U.S. companies, who will likely pass some of those costs on to consumers.
The deal Trump struck with Vietnam, for example, sets tariff rates at 20% for Vietnamese goods. That is lower than the 46% Trump imposed on April 2, but it is also far higher than where tariffs were prior to Trump taking office. Back then, average U.S. tariffs on Vietnamese goods were around 3%.
That means the cost for U.S. consumers of goods from Vietnam — which include machinery, appliances, clothing, and shoes — may soon be markedly more expensive than they have been.
In addition, bilateral deals may not be the most efficient way to achieve Trump's goals.
"U.S.-Vietnam trade restrictions would today be very, very low if Trump hadn't walked away from TPP in 2017," said Scott Lincicome, an expert in trade at the libertarian think tank Cato Institute.
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