WASHINGTON/TOKYO, July 8 — Powerhouse Asian economies Japan and South Korea have said they would try to negotiate with the United States (US) to soften the impact of sharply higher tariffs that President Donald Trump now plans to impose from the start of August.
Trump ramped up his trade war again on Monday, telling 14 nations that they would face tariffs ranging from 25 per cent for countries including Japan and South Korea, to 40 per cent for Laos and Myanmar.
However, with the start date pushed back to August 1, those countries were focusing on the new three-week window to press for an easier ride.
Japan wants concessions for its large automobile industry, top trade negotiator Ryosei Akazawa said on Tuesday.
He said he held a 40-minute phone call with US Commerce Secretary Howard Lutnick in which the two agreed to continue negotiations actively. However, he said he would not sacrifice Japan’s agricultural sector — a powerful domestic political lobby — for the sake of an early deal.
South Korea said it planned to intensify trade talks over the coming weeks “to reach a mutually beneficial result.”
Asked if the latest deadline was firm, Trump replied on Monday: “I would say firm but not 100 per cent firm. If they call up and they say we’d like to do something a different way, we are going to be open to that.”
Global stocks were flat to marginally higher on Tuesday, as investors took the latest twist in the tariff saga in stride, but the yen slid on the prospect of duties on Japanese goods.
Economists warned that the long-running tariff disputes risked stunting growth and pushing up prices, causing headaches for policymakers.
“The ongoing threat of higher tariffs intensifies stagflationary risks in the US and puts pressure on Europe to stimulate domestic demand further in order to offset headwinds in international trade,” said Swiss-based bank Julius Baer’s chief economist David Kohl.
European Union eyes deal
The European Union (EU), which is the largest bilateral trade partner of the US, aims to strike a deal before August 1 with negotiations focused on “rebalancing” and concessions for certain key export industries, a European source familiar with the negotiations said.
However, German Finance Minister Lars Klingbeil warned that the EU was prepared to retaliate if necessary.
“If we do not reach a fair trade deal with the US, the EU is ready to take countermeasures,” he said on Tuesday, speaking in the Lower House of Parliament.
Late on Monday, some EU sources had said the bloc was close to an agreement with the Trump administration.
This could involve limited concessions to US baseline tariffs of 10 per cent for aircraft and parts, some medical equipment, and spirits.
Only two deals have been struck so far, with the United Kingdom and Vietnam.
Washington and Beijing agreed to a trade framework in June. However, with many of the details still unclear, traders and investors are watching to see if it unravels before a separate, US-imposed August 12 deadline or leads to a lasting détente.
Spreading the pain
Trump said the US would impose tariffs of 25 per cent on goods from Tunisia, Malaysia, and Kazakhstan, with levies of 30 per cent on South Africa, Bosnia and Herzegovina, climbing to 32 per cent on Indonesia, 35 per cent on Serbia and Bangladesh, 36 per cent on Cambodia and Thailand, and 40 per cent on Laos and Myanmar.
Cambodia, hit hard by levies imposed in April, hailed on Tuesday a big success a reduction in the tariff rate from 49 per cent to 36 per cent and said it was seeking to negotiate a further cut.
The tariffs have been a significant issue for Cambodia’s garment and footwear sector, a major employer and the country’s largest driver of economic growth.
The US is also the primary export market for Bangladesh’s ready-made garments industry, which accounts for more than 80 per cent of its export earnings and employs four million people.
“This is absolutely shocking news for us. We were really hoping the tariffs would be somewhere between 10 per cent and 20 per cent.
“This will hurt our industry badly,” said Bangladesh Garment Manufacturers and Exporters Association’s president Mahmud Hasan Khan to Reuters on Tuesday.
— Reuters
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