Global Markets Tumble as Trump Imposes Fresh Tariffs on Asian Allies

Stock markets faced severe pressure today as President Trump announced a 25 per cent tariff on Japanese and South Korean imports, citing ongoing trade deficits with these crucial Asian allies. The declaration, made through Truth Social, his social media platform, outlined the new levies would take effect from 1 August.

The messages, addressed to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung, carried stark warnings against retaliatory measures. Trump emphasised that any countermeasures would result in matching increases to the initial 25 per cent tariff, potentially devastating both nations’ automotive and electronics sectors.

Market reaction was swift and decisive. The S&P 500 shed 49.37 points (0.8 per cent) to close at 6,229.98, retreating from Thursday’s record high. The tech-heavy Nasdaq dropped 188.59 points (0.9 per cent) to 20,412.52, while the Dow Jones industrial average plummeted 422.17 points (0.9 per cent) to 44,406.36.

The trade imbalances driving these decisions are substantial, with Japan recording a $69.4 billion surplus in goods trade with the US in 2024, while South Korea maintained a $66 billion advantage. White House officials defended the measures as essential for revitalising domestic manufacturing and funding recently enacted tax cuts.

The administration’s broader trade strategy includes plans to impose additional 10 per cent tariffs on nations aligned with the BRICS trading bloc, citing their “anti-American policies”. This expanded group now encompasses Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

These developments mark a significant escalation in global trade tensions, with twelve more countries set to receive similar trade letters via Truth Social. The move represents a decisive shift from April’s “Liberation Day” levies, which were temporarily suspended to facilitate negotiations but have now been reinstated with broader scope.