On July 7, 2025, U.S. President Donald Trump announced the imposition of 25% blanket tariffs on imports from Japan and South Korea, effective August 1, 2025. This decision, shared via letters posted on Truth Social to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung, marks a continuation of Trump’s trade war strategy initiated in April 2025.
The tariffs target all goods from these countries, with additional sector-specific duties on key industries like cars, steel, and electronics, but are not stacked on top of existing sectoral tariffs. The U.S. had a $68.5 billion goods trade deficit with Japan and a $66 billion deficit with South Korea in 2024, according to the Office of the U.S. Trade Representative. Trump has cited these deficits as justification, arguing they reflect unfair trade practices.
In April 2025, Trump introduced “reciprocal” tariffs under a “Liberation Day” policy, initially setting a 24% tariff on Japan and 25% on South Korea. These were paused on April 9 for 90 days, reducing rates to a flat 10% to allow negotiations. The new 25% tariffs effectively reinstate and slightly increase Japan’s rate. The letters warn that if Japan or South Korea raise tariffs on U.S. goods in response, the U.S. will increase its tariffs by an equivalent amount. They also note that tariffs could be avoided if companies from these countries manufacture in the U.S., with promises of streamlined approvals.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Trump extended the deadline for trade negotiations to August 1, suggesting flexibility if countries propose alternative deals. However, only preliminary agreements with the UK, Vietnam, and China have been reached so far, with Japan and South Korea’s talks slowed by their own elections and demands for exemptions on key exports like steel and autos. Alongside Japan and South Korea, 12 other nations received tariff letters, with rates up to 40% (e.g., Myanmar and Laos). These vary based on trade deficits and are part of Trump’s broader strategy to address perceived economic imbalances.
Prime Minister Ishiba called the tariffs “extremely regrettable,” questioning their compliance with U.S.-Japan trade agreements and World Trade Organization rules. Japan is pushing for a bilateral deal, with a cabinet task force formed to strategize. The Finance Ministry vowed to monitor markets and may take “bold action” if fluctuations become excessive. South Korea plans to intensify trade talks to mitigate the impact, particularly on its auto industry, which exported $34.74 billion in vehicles to the U.S. in 2024.
U.S. markets dipped, with the S&P 500 down 0.8% and the Dow Jones Industrial Average falling 0.9–1.2% on July 7. Shares of Japanese automakers like Toyota (-4%), Nissan (-7.16%), and Honda (-3. U.S. markets dipped, with the S&P 500 down 0.8% and the Dow Jones Industrial Average falling 0.9–1.2% on July 7. Shares of Japanese automakers like Toyota (-4%), Nissan (-7.16%), and Honda (-3.86%) declined, reflecting concerns over potential auto tariff escalations.
Economists warn that tariffs may raise consumer prices, as seen in 2018 when Trump’s tariffs on South Korean washing machines increased prices by 34%. The Tax Foundation estimates Trump’s 2025 tariffs could equate to a $1,200 tax increase per U.S. household. The tariffs strain relations with close allies, potentially disrupting supply chains for cars, electronics, and semiconductors. Japan and South Korea are key U.S. partners in economic security, shipbuilding, and critical minerals, making the move contentious.
Both countries may impose counter-tariffs, escalating tensions. China, facing higher U.S. tariffs, has already signaled closer cooperation with Japan and South Korea to counter U.S. policies, though joint action claims were downplayed by Seoul and Tokyo. The tariffs reflect Trump’s skepticism of free trade and focus on reducing trade deficits, but critics argue deficits aren’t inherently harmful and tariffs may hurt U.S. consumers more than they help manufacturers. The unilateral approach, bypassing Congress via emergency powers, has sparked legal debates, with a federal court previously ruling against similar actions in May 2025.