Trump delays tariffs, pressures trade partners with 25% threat and tight deadline

Key topics:Trump threatens 25% tariffs on key trade partners starting Aug. 1Letters sent to nations amid ongoing trade deal negotiationsTariff delay offers countries three weeks to reach agreements.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Josh Wingrove, Catherine Lucey and Stephanie Lai.President Donald Trump unveiled a wave of letters again threatening key trading partners with high tariff rates even as he delayed the increased duties until Aug. 1 and suggested that he was still open to negotiations.Trump posted letters to various nations on social media on Monday, starting with his intent to impose 25% levies on goods from Japan and South Korea. A dozen more followed throughout the afternoon, outlining plans to tariff goods from trading partners including South Africa, Indonesia, Thailand and Cambodia. Later at the White House, Trump signed an executive order that further delayed the so-called “reciprocal” tariffs, effectively buying each affected nation an extra three weeks to cut a deal. He said that “for the most part” he was content to simply impose the duties, even as he indicated he was continuing negotiations.“We’ve made a deal with United Kingdom, we’ve made a deal with China, we’ve made a deal - we’re close to making a deal with India,” Trump said. “Others we met with, we don’t think we’re going to be able to make a deal. So we just send them a letter.”Still, the US president said the Aug. 1 deadline was “not 100% firm” and signaled he might tweak the rates further.“Maybe adjust a little bit, depending,” Trump said, indicating he would look favorably on countries continuing to offer additional concessions. “We’re not going to be unfair.”Asia’s equity indexes were mixed with modest moves after Trump left the door open for additional trade talks. The MSCI regional stock benchmark edged up 0.1%, after swinging between small gains and losses earlier Tuesday. S&P 500 futures were little changed. South Korea’s won strengthened, while a gauge of the dollar dipped 0.2%. The euro gained on a report the US offered a deal to the European Union with a 10% tariff level.The flurry of letters was the latest turn of the screw for an overhaul of trade policy that has roiled markets and trade across the globe. One week after announcing the tariffs at a Rose Garden event on April 2, Trump offered a 90-day reprieve, lowering duties to 10% to allow time for negotiations. The steady flow of tariff threats has fuelled uncertainty for markets, central bankers and executives trying to game out the effect on production, inventories, hiring, inflation and consumer demand.Trump and other White House officials faced questions about whether the letters were simply a novel method of once again punting a looming July 9 deadline for his reciprocal tariffs, which were first announced on April 2. Most 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. White House Press Secretary Karoline Leavitt said additional letters will arrive in the coming days. Trump in the missives also warned nations against retaliation. “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.Few nations successfully negotiated deals in the short time given. In the interim, Trump announced framework agreements with the United Kingdom and Vietnam and a trade truce with China. .Trump said the reciprocal rates didn’t include any sectoral-specific tariffs that the administration implemented or planned in key industries. Both Japan and South Korea are major auto exporters, and are also facing US tariffs on steel. Asked why Trump had chosen to hit Japan and South Korea first, Leavitt said it was “the president’s prerogative,” adding that “those are the countries he chose.” She added that the administration is “close” to securing agreements with some other trading partners, adding that Trump “wants to ensure these are the best deals possible.”For many of the nations, engaging Trump in trade negotiations on his accelerated timeline has proven difficult.Even though Japan and Korea are two of the US’s closest allies in Asia, they’re both dealing with domestic situations where cutting trade deals might be risky politically. South Korean President Lee Jae-myung only took office on June 4, and elections in Japan’s upper house later this month made the government of Prime Minister Shigeru Ishiba reluctant to offer too much in concessions.The European Union wasn’t expecting to receive a letter setting tariff rates Monday, according to a person familiar with those discussions, who requested anonymity.Trump’s levies are adding additional funds to the Treasury at a time when investors are worried about the nation’s mounting debt, particularly after Congress passed much of the president’s economic agenda in a $3.4 trillion tax cut and spending package last week. The dollar has slumped and longer-term borrowing costs remain elevated.Despite Trump’s contention that foreign countries pay his tariffs directly, the burden actually falls to American importers, which must contend with tighter profit margins, weigh raising prices for consumers or seek discounts from foreign suppliers.“All of that new revenue is just a tax on US businesses,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, wrote in a LinkedIn post Friday..At the Rose Garden ceremony on April 2, the Trump administration announced steeper levies on more than 50 trading partners ranging as high as 50% – a shock to the economic outlook that sent financial markets into a tailspin. A week later, the president suspended those peak rates.The negotiating tracks have been different for the US’s three largest trading partners - Mexico, Canada and China. Beijing and Washington have negotiated truces that lowered tariffs on Chinese products that soared to 145% and eased export controls on key supplies. As partners in the US-Mexico-Canada Agreement, the two US neighbors aren’t subject to the reciprocal tariffs and instead are trying to negotiate lower rates on sectoral levies.On top of market jitters and economic headwinds, legal challenges offer a potential check on the reciprocal tariffs, which Trump declared under executive authority known as the International Emergency Economic Powers Act, or IEEPA.The US Court of International Trade ruled on May 28 that the vast majority of Trump’s levies were issued illegally under IEEPA and ordered them blocked. A day later, an appeals court gave the administration a temporary reprieve from the ruling and decided that the tariffs can remain in place until it hears the case. Arguments are scheduled for July 31..Yet the Trump administration is using another presidential power to impose tariffs – Section 232 of the Trade Expansion Act – on specific sectors so far including autos, steel and aluminium. Other 232 sectoral cases are in the works, potentially allowing Trump to cover a wide range of US imported raw materials as well as finished consumer goods in case the courts strike down the IEEPA levies. Another friction point for Trump on tariffs is the Federal Reserve. Jerome Powell, the chair of the US central bank, has held off on lowering rates this year - despite intense pressure and name-calling - in part to determine whether tariff-driven price hikes might evolve into more persistent cost-of-living pressures.Bloomberg Economics estimates that if all reciprocal tariffs are raised to their threatened level on July 9, average duties on all US imports could climb to around 20% from less than 3% before Trump’s inauguration in January. That would add to growth and inflation risks for the US economy.Between higher tariffs, oil prices and immigration restrictions in the US, “the bottom line is that we should see inflation move higher over the coming months,” Torsten Slok, chief economist with Apollo Global Management, wrote in a note Sunday. © 2025 Bloomberg L.P.

Trump delays tariffs, pressures trade partners with 25% threat and tight deadline

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