Trump announces new tariffs
President Donald Trump announced on July 7, 2025, that the USA will impose 25% tariffs on imports from Japan and South Korea starting August 1. This measure affects all products from these countries entering the USA and is part of a strategy to enforce unilateral tariffs against countries without trade agreements with the USA.
Trump wrote in letters to the leaders of Japan and South Korea that if these countries were to increase their own tariffs, such increases would be added to the US tariff rate of 25%. The tariff rate for South Korea corresponds to a previous announcement from April 2025; the rate for Japan has been slightly increased compared to previous figures.
Possible effects on markets
- Capital market interest rates: Such protectionist measures can create uncertainty in financial markets. Trade conflicts often lead to volatility in capital market interest rates as investors reassess risks.
- US Dollar: A trade conflict can affect the dollar – depending on market reactions, it could lead to either appreciation or depreciation. The dollar often strengthens as a “safe haven” during times of global uncertainty.
- Trade relations with the EU: Although Trump’s announcement is directed at Japan and South Korea, tensions could also indirectly affect relations with the EU. The EU could be impacted by countermeasures or intensified negotiations.
- Market stability: Generally, such tariff increases heighten the risk of countermeasures from other states (reciprocity), which can disrupt global supply chains and impair market stability.
These assessments are based on the observation that similar previous trade conflicts have already shown how sensitive capital markets can react to protectionist measures. So far, only a few new agreements have been closed (e.g., with the UK and Vietnam), so further escalations are possible.
In summary, Trump’s decision will lead to a significant increase in import costs for goods from Japan and South Korea in the USA starting August 2025, with potentially far-reaching consequences for international trading partners and financial markets worldwide.