US President Donald Trump has ratcheted up his trade offensive, issuing formal notice of new tariffs on a broad group of countries as markets recoiled from the growing prospect of a global trade realignment.
On Monday in the US, the White House published letters sent to the leaders of Japan, South Korea, Malaysia and Kazakhstan, announcing a 25% tariff on all exports to the United States, effective August 1. South Africa will face a 30% tariff, while Laos and Myanmar have been hit with a steeper 40% levy.
Trump also warned of a further 10% penalty on countries that "align with anti-American policies of BRICS,” the 11-nation bloc led by Brazil, Russia, India, China and South Africa.
Further warnings
The administration signalled the levies could be adjusted depending on each country’s willingness to negotiate, with Trump stating that tariffs "may be revised upward or downward depending on our relationship with your country." Moreover, he warned that countries instituting retaliatory tariffs would face a further 25% tariff.
Australia has not received a tariff letter under the latest round of notifications, meaning most of its exports to the US remain subject to the baseline 10% rate. However, steel and aluminium continue to face a 50% tariff, in line with measures announced earlier this year.
While markets had been bracing for further trade manoeuvres from the Trump administration, the sweeping breadth and detail of the letters caught investors off guard.
Markets retreat as tariff letters land
US stocks fell sharply in the first trading session after the July 4 long weekend, with the Dow Jones dropping 0.94%, the S&P 500 losing 0.79% and the Nasdaq falling 0.92%. The declines marked a retreat from recent record highs, particularly in the tech-heavy Nasdaq.
Treasury yields climbed, with the benchmark 10-year yield up 4 basis points to 4.38%, as investors reassessed the outlook for Federal Reserve rate cuts amid inflationary risks from tariffs. Two-year yields also rose, finishing at 3.90%.
Analysts noted that the threat of further escalation — particularly the possibility of retaliation from targeted countries — added fresh uncertainty to an already fragile global trade environment.
The US dollar strengthened across major currencies, with the Australian dollar trading lower on the day.
Tariff war heats up ahead of extended August deadline
The letters are the latest salvo in Trump’s sweeping reset of US trade relations under his second term, beginning with his ‘Liberation Day’ announcement on April 2 unveiling an initial slate of so-called reciprocal tariffs that were later paused for 90 days.
An executive order signed overnight has now extended the original July 9 deadline by another three weeks, giving trading partners until August 1 to reach deals before tariffs take effect.
While some countries are still in active negotiations with Washington, the administration has made clear it is prepared to enforce tariffs unilaterally if deals are not struck.
Muted market reaction
eToro market analyst Josh Gilbert noted that market reactions to Trump’s tariff deadlines have become more muted, with markets growing “a bit pessimistic about Trump’s big deadlines”.
“Volatility seems set to be a little more subdued compared to the conditions that stretched over April’s saga,” he said, adding that “it shouldn’t be surprising to see Trump kick the tariff can further down the road here.”
White House Press Secretary Karoline Leavitt said more letters would be sent in the coming days and that some agreements may be reached ahead of the August 1 enforcement date.