U.S. President Donald Trump sent letters to governments around the world on Monday informing them of the tariff rates he would impose starting Aug. 1 — though Canada’s July 21 deadline to reach a deal appears to remain.
Trump said he would impose a 25 per cent tariff on imports from Japan and South Korea beginning next month, marking a new phase in the trade war he launched earlier this year.
The letters sent to 14 countries so far — which included smaller U.S. exporters, like Serbia, Thailand and Tunisia — hinted at opportunities for additional negotiations while at the same time warning that any reprisal steps would be met with a like-for-like response.
“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 per cent that we charge,” Trump said in letters to the Japanese and South Korean leaders, which he posted on his Truth Social platform.
The higher tariffs take effect on Aug. 1 and notably will not combine with previously announced sector tariffs, such as those on automobiles and steel and aluminum.
Later, Trump also announced the U.S. will impose 25 per cent tariffs on Tunisia, Malaysia and Kazakhstan; 30 per cent on South Africa and Bosnia; 32 per cent on Indonesia; 35 per cent on Bangladesh and Serbia; 36 per cent on Cambodia and Thailand; and 40 per cent on Laos and Myanmar.
The Sunday Magazine23:50Tensions continue for Canada’s trade relationships
The rate for South Korea is the same as Trump initially announced on April 2, which he was calling “Liberation Day,” while the rate for Japan is one point higher than first announced. A week later, he capped all of the so-called reciprocal tariffs at 10 per cent until July 9 to allow for negotiations.
Only two agreements have been reached so far with Britain and Vietnam.
South Korea said in a statement it will step up trade negotiations with the United States in the period leading up to Aug. 1 to achieve mutually beneficial results and to advance both countries’ key industries through “renaissance partnership.”
Japanese Prime Minister Shigeru Ishiba said Tuesday that Tokyo would continue negotiations with the U.S. to seek a bilateral trade deal that benefits both countries.
Japan has received a proposal from the United States to continue trade discussions until the newly set Aug. 1 deadline, Ishiba said in a meeting with cabinet ministers to discuss Japan’s strategy in dealing with U.S. tariffs.
Trump signed an executive order on Monday formally delaying the July 9 deadline to Aug. 1, adding that “we are close” on some deals.
The European Union will not be receiving a letter setting out higher tariffs, EU sources familiar with the matter told Reuters on Monday.
Moves felt by markets
U.S. stocks fell in response, the latest market ruction since Trump unleashed a global trade war on his return to office in January. His moves have repeatedly whipsawed financial markets and sent policymakers scrambling to protect their economies.
U.S. stocks were driven to near bear-market territory by his cascade of tariff announcements through the early spring but quickly rebounded to record highs in the weeks after he put the stiffest levies on hold on April 9.
The S&P 500 was down nearly one per cent on Monday, its biggest drop in three weeks. U.S.-listed shares of Japanese automotive companies fell, with Toyota Motor down 4.1 per cent at mid-afternoon trading and Honda Motor off by 3.8 per cent. The dollar surged against both the Japanese yen and the South Korean won.
U.S. Treasury Secretary Scott Bessent said earlier on Monday he expected several trade announcements to be made in the next 48 hours, adding that his inbox was full of last-ditch offers from countries to clinch a tariff deal by the deadline.
Bessent did not say which countries could get deals and what they might contain. Trump has kept much of the world guessing on the outcome of months of talks with countries hoping to avoid the hefty tariff hikes he has threatened.
Countries have scrambled to hammer out deals before the Wednesday deadline. South Korea and Indonesia dispatched representatives to Washington, while Thailand submitted a new trade proposal offering zero tariffs on many U.S. goods.
“We’ve had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals,” Bessent said in an interview with CNBC. “So it’s going to be a busy couple of days.”
Canada likely not affected
While other countries were hit with high rates on Liberation Day, Canada was spared any additional pain on April 2.
Because the looming trade deal that was set for July 9 related to tariffs the U.S. president handed out three months ago, Canada is not under the same pressure to make a deal in the coming days.
Instead, Prime Minister Mark Carney and Trump agreed in March to negotiate a new security and economic partnership, and have been working toward that since Carney visited the White House in early May. Last month, the two leaders set July 21 as the deadline for reaching that deal.
Prime Minister Mark Carney said on Monday that scrapping the digital services tax was one part of the bigger trade negotiation with the U.S., though the White House said Carney ‘caved’ when trade talks were cancelled. Talks have since resumed.
However, Canada is still being hit with fentanyl-related tariffs. Those 25 per cent tariffs, with a lower 10 per cent levy on energy and potash, only apply to exports not compliant with the Canada-U.S.-Mexico Agreement (CUSMA) on trade.
Canada is also being hit with Trump’s tariffs on steel, aluminum and automobiles.
That doesn’t mean Canadians won’t feel the impact of Trump’s trade negotiations this week, however, as high tariff rates imposed on other nations could still disrupt the global trading system and impact Canadians indirectly.
EU still working to reach deal
For its part, the European Union still aims to reach a trade deal by July 9 after European Commission President Ursula von der Leyen and Trump had a “good exchange,” a commission spokesperson said.
It was not clear, however, whether there had been a meaningful breakthrough in talks to stave off tariff hikes on the United States’s largest trading partner.
Adding to the pressure, Trump threatened to impose a 17 per cent tariff on EU food and agriculture exports, it emerged last week.
He also put members of the BRICS group in his sights as its leaders met in Brazil, threatening an additional 10 per cent tariff on any country of the informal trading bloc aligning themselves with “anti-American” policies.
The BRICS group comprises Brazil, Russia, India and China and South Africa along with recent joiners Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.