Trump Sets New Reciprocal Tariff Rates for 14 Countries Beginning Aug. 1
Two days before the now extended pause on higher country-specific reciprocal tariffs was to end (see 2507070054), President Donald Trump shared screenshots of letters he is sending to trading partners large -- Japan, South Korea, Thailand, Indonesia and Malaysia -- and small, informing them what rates their goods will face at the border, starting Aug. 1.
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These rates, the letters note, are separate from goods subject to sectoral tariffs, such as autos and auto parts, steel and aluminum, and, at the moment, goods that are under Section 232 investigation but not yet tariffed, such as medicines, lumber, aerospace, electronics and copper.
The rates he announced were generally similar to, but not always identical to, those he announced in April and that took effect April 9, then delayed for 90 days after a stock market sell-off. The letters say that if any of these countries retaliate, those higher tariffs will be added to the rates he just announced.
As Trump did in his first term, he sometimes changed rates that the analysis produced if they didn't result in what he likes to call nice, round numbers. So Japan, the fourth largest exporter to the U.S. so far this year, will face 25% tariffs, rather than the 24% announced April 2.
Similarly, Malaysia had been given 24% in April, but will see 25%. Serbia and Bangladesh were told 35%, rather than 37% announced on Liberation Day. However, Trump also rounded down, with Kazakhstan seeing a 25% rate rather than a 27% rate, Tunisia receiving a 25% rate instead of 28%, and Laos and Myanmar getting 40% rather than the 44% and 48%, respectively, they had been expecting in April.
However, not all the rates were rounded to numbers that end with 5 or 0. Thailand will face 36%, the same as on Liberation Day; Cambodia, 36%, rather than 49%; Indonesia, 32%, the same as on Liberation Day.
And Bosnia, which had been assigned 35% in April, now is being told 30%. South Africa faces 30% tariffs, the same as in April.
However, the letters leave open the possibility of negotiation -- and of further hikes.
Treasury Secretary Scott Bessent, in television interviews on both July 6 and July 7, ahead of the social media postings, portrayed these letters as another way of pressuring trade partners to offer more concessions.
Bessent said on CNBC July 7: "We've had a lot of people change their tune, in terms of negotiations," since Trump and he both said that reciprocal tariff rates would return to April levels if deals were not agreed to.
"My mailbox was full last night with a lot of new proposals," Bessent said.
He characterized the letters as saying, "Here's the rate, unless you want to come back and try to negotiate."
All the letters suggest there is a path to avoid the rates, saying, "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. These Tariffs may be modified, upward or downward, depending on our relationship with your Country."
All the letters follow the same format.
Bessent told CNN on July 6: "I think we're going to see a lot of deals very quickly." He characterized the letters as affecting 100 small countries that there's not much trade with, and said those countries would mostly stay at 10%.
The White House press secretary said at a press briefing at the White House on July 7 that the president will issue a new executive order to extend the pause on higher reciprocal rates to Aug. 1.
The countries Trump talked about all have trade surpluses with the U.S., but Kazakhstan, Laos and Myanmar are not even in the top 50 sources of imports to the U.S.
White House Senior Counselor for Trade Peter Navarro, the most protectionist of Trump's high-level advisers, said on CNBC that he doesn't feel disappointed that 90 deals were not announced in 90 days, as he had predicted. He said all the countries with the largest trade surpluses are engaging in negotiations, though he also said: "What we're learning from the negotiations is how difficult it is for these countries to give up the advantages they have over us."
Trump told reporters late July 7 that there could be 12 to 15 letters sent out before July 9, with some on Monday, Tuesday, and Wednesday.
"And we've made deals also so we can have a combination of letters, and some deals have been made," he said at a New Jersey airport as he headed to his Bedminster golf club.