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Here’s a breakdown of the new tariff rates mentioned in Trump’s letters:
25% tariffs: Japan, South Korea, Malaysia, Kazakhstan, Tunisia
30%: South Africa, Bosnia and Herzegovina
32%: Indonesia
35%: Bangladesh, Serbia
36%: Cambodia, Thailand
40%: Laos, Myanmar
Trump said the US might adjust these tariffs based on how these countries respond and how the US relationship with them develops. Trump explained that the reason behind the tariffs is to fix the US trade deficit. The difference between what the US imports vs exports. He believes that many countries benefit more from trade with the US than the US does in return. However, many experts disagree and say that trade deficits are not necessarily harmful and that these tariffs may hurt both sides.
For example, the US had a $68.5 billion trade deficit with Japan and a $66 billion deficit with South Korea in 2024. But countries like Myanmar had much smaller deficits, only around $579 million.
Each country exports different goods to the US:
Japan and South Korea exports cars, electronics, machinery
Kazakhstan exports oil and metal
Malaysia exports electronic parts
South Africa exports precious metals
Laos and Myanmar export clothes, glasses, and bedding
The letters also warned countries not to try to avoid tariffs by sending goods through other countries through a method called transshipping. If a product is caught being rerouted this way, it will be charged the higher tariff it was meant to avoid. Trump told these countries not to retaliate by placing their own tariffs on US goods. If they do raise tariffs on American products, Trump said he’ll add that same amount to the existing US tariffs against them. However, if these countries remove their own tariffs and trade barriers, the US may consider lowering its tariffs too.
Originally, the higher tariffs were supposed to begin this Wednesday, but Trump signed an executive order delaying the start until August 1. He said the delay was based on new advice from government officials. This isn’t the first time Trump announced these tariffs. He introduced them earlier this year in April and called them “liberation day tariffs,” but paused their full enforcement for 90 days, reducing all tariffs to 10%. That pause was about to expire, but now it's been extended again.
US financial markets dropped after Trump’s announcement:
Dow Jones fell by 422 points (0.94%)
S&P 500 dropped 0.79%
Nasdaq lost 0.92%
Trump had claimed his team would reach 90 trade deals in 90 days, but so far, only general agreements have been made with the UK, Vietnam, and China. The Vietnam deal includes 20% tariffs on its goods sent to the US and 40% on transshipped items, while the US will get duty-free access to Vietnam’s markets. Even though a court ruled in May that Trump’s sweeping tariffs might be illegal, the appeals court has allowed them to remain in place for now as the legal process continues.
