Poli Alert Politics & Civics
Related Articles
President Donald Trump reignited trade war fears Monday, threatening new 25% tariffs on imports from Japan and South Korea, with additional penalties on goods allegedly transshipped through their countries, just days before a July 9 deadline he set in April.
The warning came in the form of two official letters Trump posted to Truth Social, sending already nervous stock markets lower. The S&P 500 fell by as much as 1% following the announcement, as traders braced for renewed volatility and global backlash.
Trump had initially backed off from enforcing steep tariffs in early April after his “Liberation Day” speech, which triggered one of the worst market sell-offs in recent history. But Monday’s announcement signaled a return to a more aggressive trade stance as part of Trump’s broader America First economic vision.
“They’ll start to pay on Aug. 1. The money will start to come into the United States,” Trump said when asked last week whether countries would get flexibility around the July 9 deadline.
Tariff Threats and Market Fallout
Markets opened the week already jittery after days of mixed messages from White House officials. Monday’s letters added fuel to concerns that Trump could once again take unilateral action, reminiscent of 2018–2019 trade war tacticsthat disrupted supply chains and rattled global investors.
Complicating matters, Trump on Sunday threatened an additional 10% tariff on top of his existing 10% baseline against any country aligning with BRICS policies. The BRICS bloc — Brazil, Russia, India, China, and South Africa— met in Rio de Janeiro this weekend.
“The UNITED STATES TARIFF Letters, and/or Deals, with various Countries from around the World, will be delivered starting” noon Monday, Trump declared on social media.
The White House has not clarified Trump’s rationale for targeting BRICS-affiliated countries.
Administration Scrambles to Explain Policy
Treasury Secretary Scott Bessent, in an appearance on CNBC, tried to downplay the timeline’s immediacy, saying, “President Trump has said … countries would not go back to the reciprocal rate until Aug. 1.”
Still, no formal trade deals have been announced apart from limited statements on arrangements with the U.K., China, and Vietnam. With less than 48 hours to the July 9 deadline, officials say Trump alone will make final calls.
“Any decisions around trade will come directly from President Trump,” White House spokesperson Kush Desai told The Wall Street Journal.
Impact on the Federal Reserve and Economy
While Capital Economics analysts said they don’t expect tariff threats alone to derail the economy, they cautioned about pressure on the Federal Reserve, which has resisted Trump’s calls for interest rate cuts.
Elevated tariffs can fuel inflation, making borrowing more expensive and complicating the Fed’s monetary policy outlook.
“Many [Federal Reserve officials] are not confident about cutting rates until the inflationary effects of tariffs are clearer,” Capital Economics wrote in a note Monday. “We doubt they’ll cut this year.”
What Comes Next?
The next 72 hours will be critical. With Trump’s tariff authority largely unchecked, and a volatile policy environment, investors and foreign governments remain on edge.
As the August 1 enforcement date approaches, the global economy may be in for another bout of trade uncertainty, echoing the turmoil of Trump’s first term — only now, with a tighter timeline and less predictability.
“All deals and deadlines will remain in flux as long as the president says so,” said a senior trade adviser close to the negotiations.
Whether that unpredictability will result in new deals — or new chaos — remains to be seen.
