US
President Donald Trump announced plans to impose higher tariff rates of
25%-40% on key trading partners and signed an executive order holding
off the new duties until Aug. 1.
Tariffs on Japan, South Korea,
Malaysia, Kazakhstan and Tunisia, would be 25%, South Africa and Bosnia
30%, Indonesia 32%, Bangladesh and Serbia 35%, Thailand and Cambodia
36%, while Laos and Myanmar would face a 40% levy.
Meanwhile,
Trump suggested the possibility of additional trade negotiations and
delays at the White House shortly after he sent out the tariff letters,
as he said the notifications were “not 100% firm”. He also said the US
is close in making a deal with India.
White House Press Secretary Karoline Leavitt said additional letters will arrive in the coming days.
Main takeaways:
the deadline was pushed towards August 1st vs. July 9th;
announced new tariff levels (effective on August 1st) for 14 countries
Trump said that the tariffs on each country would be separate from any “sectoral” tariffs that he imposes;
we should expect more deals/letters coming: Leavitt said Trump will send more letters
This is what the effective tariff rate looks like as of right now:
What is the worst scenario for Japan and SKorea if tariffs will sustain?
JPM
strategist Rie Nishihara expects a reciprocal tariff of 24% will lead
to 0.4%-0.9% drag in Japan GDP and 7% decline in TOPIX 2025 EPS. Note
that these estimates are under the assumption that the additional
tariffs will be applied to products other than those subject to product
specific tariffs, which is different from the language used in Trump’s
latest letters (Trump said the tariffs on each country would be separate
from any “sectoral” tariffs that he imposes). The downside scenario
estimated by Rie for NKY is 34,000.
On South Korea, its Tech and
Discretionary sectors have 40% and 33% revenue exposure to the US,
respectively. JPM Strategist Rajiv Batra sees 7% and 12% decline in EPS
for its Tech and Discretionary sectors.
* * *
Update (1422ET): By
late afternoon, the White House social media team had posted a total of
seven trade warning letters, with the latest addressed to Malaysia,
Kazakhstan, South Africa, Laos, Myanmar, Cambodia, Thailand, Serbia,
Bangladesh, Indonesia, Bosnia and Herzegovina, and Tunisia. Earlier in
the day, letters to Japan and South Korea were also made public on Truth
Social.
By Independent News Roundup
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