Trump threatens higher tariffs on more than a dozen countries, but extends negotiating deadline

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U.S. President Donald Trump threatened to hike tariffs on more than a dozen countries by Aug. 1, doubling down on his threats against trading partners while extending their deadline to reach deals.

Mr. Trump made the announcements in a series of letters posted on his social media website Truth Social on Monday.

He said he would increase tariffs on Japan and South Korea, two major trading partners, to 25 per cent. He also sent letters to smaller trading partners, including Indonesia, South Africa and Malaysia, threatening tariffs ranging from 25 to 40 per cent. Canada was not among the 14 letter recipients as of Monday evening.

The letters, which Mr. Trump had threatened for days, extend the ultimatums he made on so-called “Liberation Day” in early April. Back then, he unveiled what he called “reciprocal tariffs” on dozens of trading partners, only to pause them for three months in the face of market turmoil while leaving a baseline 10 per cent tariff in place.

The deadline for the reimposition of these “reciprocal” tariffs was supposed to be July 9. White House press secretary Karoline Leavitt told reporters on Monday that Mr. Trump would sign an executive order extending the “Liberation Day” deadline until Aug. 1.

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The tariff rates outlined in the letters were similar to those threatened in April, with the notable exception of Cambodia, which saw the potential tariff rate drop to 36 per cent from 49 per cent. In effect, the letters functioned to remind trading partners of Mr. Trump’s position, while giving them more time to cut deals that might dampen the blow of U.S. protectionism.

Financial markets, nonetheless, reacted poorly to the reminder of Mr. Trump’s commitment to remaking the global trading order through the aggressive use of tariffs. The S&P 500 dropped 0.8 per cent on Monday while the Nasdaq Composite closed down 0.9 per cent.

The White House had hoped the threat of “reciprocal tariffs” would bring countries to the negotiating table. One top adviser said in April that the U.S. would cut 90 deals in 90 days.

Trade negotiators from around the world have descended on Washington in recent months to try to hammer out agreements. So far, however, the Trump administration has only concluded three deals: Two sparse trade pacts with Britain and Vietnam, and a temporary agreement with China to lower the temperature in their trade war.

Throughout it all, Mr. Trump has remained committed to the idea that other countries are ripping off the United States. This was reflected in Monday’s 14 letters, which were addressed to the country leaders and identical except for the tariff rates.

“Our relationship has been, unfortunately, far from Reciprocal,” Mr. Trump wrote, complaining about bilateral trade deficits, tariffs and non-tariff barriers.

Mr. Trump said the new tariffs would apply to “any and all” products those countries send to the U.S., and that this would be separate from the sectoral tariffs the U.S. has already placed on steel, aluminum and automobiles.

He added that goods shipped through third-party countries, in an attempt to avoid the levies, would be subject to the same tariff rates. And he warned that if countries retaliated with their own counter-tariffs, “whatever the number you choose to raise them by, will be added onto” the U.S. tariff.

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Still, Mr. Trump suggested he remained open to negotiations, and could adjust tariffs “upward or downward, depending on our relationship with your Country.”

“If you wish to open your 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,” Mr. Trump wrote.

Negotiators from Japan and South Korea have been to Washington in recent days trying to reach deals, but leaders in Tokyo and Seoul had suggested it would be difficult to come to an agreement before the July 9 deadline.

Paul Ashworth, chief North America economist at Capital Economics, said the kind of tariff increase Mr. Trump outlined for Japan and South Korea on Monday shouldn’t, in isolation, increase America’s average effective tariff rate on imports all that much.

“That’s because those reciprocal rates don’t apply to goods subject to Trump’s product-specific tariffs, with autos accounting for 34 per cent of imports from both countries, which are already subject to a 25 per cent levy that Trump has more-than-once threatened to raise to 50 per cent,” Mr. Ashworth wrote in a note to clients.

“Add in exempt electronics and pharmaceuticals, and only 54 per cent of imports from Japan would be exposed to this higher reciprocal tariff, and only 46 per cent of imports from South Korea.”

The U.S. has been in intense trade discussions with a number of other trading partners, including the European Union and Canada.

According to report on Monday from Reuters, the EU will not be receiving a letter from the U.S. setting out higher tariffs, with EU sources saying that the bloc was close to an agreement with the Trump administration. The EU is eyeing limited concessions to the U.S. baseline tariffs for aircraft, some medical equipment and spirits, alongside a lower rate for autos, which currently face 25 per cent sectoral tariffs, Reuters reported.

Canada was not hit with “reciprocal tariffs” in April, but is still facing U.S. tariffs on steel, aluminum and automobiles, as well as products that don’t comply with the continental Free Trade Agreement’s rules of origin.

Ottawa has said it is trying to reach an agreement to remove these tariffs by July 21.