Former President Donald Trump has already pursued an aggressive tariff policy against a number of countries. Specifically, he placed a 25% tariff on Japanese and South Korean products. Making this change is a deliberate strategy in the greater effort to renegotiate our trade relationships. It begins on August 1 for imports from twelve countries.
Trump’s administration justified the tariffs under the guise of an economic emergency. This action is now being challenged in court. In American Alliance for Manufacturers v. U.S. Trade Representative, the U.S. Court of International Trade held that Trump exceeded his authority when he imposed those tariffs. The court’s decision has opened up the question of the legality of the tariffs and when or if they will end.
Back in 2018, the Trump administration was taking bows for completing just that in a new trade agreement with South Korea. Now, that same country is slapped with a painful 25% tariff on all of its imported products. In fact, this specific Japan tariff had previously surfaced as a 24% tariff on Japan when Trump first announced these new rates. He admonished countries not to impose their own tariffs on imports. If they fail to do so, they will be subject to up to double the tariffs currently being imposed by the United States.
New tariffs targeted Japan and South Korea, along with imports from eight other nations. This action expands the reach of the punitive trade measures. Trump’s plan to close this loophole requires a punishing 40% tax on all imports coming from Myanmar and Laos. At the same time, it will slap a 36% tax on imports from Cambodia and Thailand. Imports from Serbia and Bangladesh will be hit with a whopping 35% tariff. At the same time, products coming from Indonesia would be subject to a whopping 32% tax.
Trump suggested that he has made these tariffs specific for each country. He stated, “These tariffs may be modified, upward or downward, depending on our relationship with your Country.” This indicates that the character of diplomatic relations will be a fundamental factor in deciding whether tariffs are eliminated or extended.
In past years, Trump has signed very small deals with Japan primarily on agricultural goods and digital trade in 2019. Notwithstanding this agreement, he still has hugely important trade issues that remain unresolved with other partners, the European Union and India.
Wendy Cutler, an expert on economic security matters, noted the importance of relationships with allies like Japan and South Korea: “Both have been close partners on economic security matters and have a lot to offer the United States on priority matters like shipbuilding, semiconductors, critical minerals and energy cooperation.”
The administration’s position reflects that they are still serious about using these tariff measures. Josh Lipsky of the Atlantic Council noted that this would suggest that he is serious about getting rid of most of these tariffs. He thinks it’s more than a negotiating posture. The consequences of these tariffs may reach far beyond the immediate economic effects, changing the landscape of global trade.
Indeed, we know from Trump’s letters to foreign leaders that the president considers these tariffs terminal acts of generosity. He thinks they are not punitive punishments. As he said in one of his first letters, “I told you we’d do some deals…For the majority of you, though, we’re going to send a letter.”
Furthermore, Trump has explicitly warned foreign nations about retaliation: “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% that we charge.” This position highlights the overall approach of his administration towards retaining leverage in trade negotiations.
Scott Lincicome expressed skepticism regarding any significant changes in trade dynamics. “I don’t see a huge escalation or a walk back — it’s just more of the same.” His comments are a real indication that even these conditional tariffs will not force real negotiations or improvements in our countries’ trade relations.
Karoline Leavitt emphasized the administration’s commitment to individualized trade strategies: “We have tailor-made trade plans for each and every country on this planet and that’s what this administration continues to be focused on.” This could imply a preferential return to bilateral deals and away from multilaterals.
