Trump Slaps 25% Tariffs on Japan and South Korea; India Given More Time to Finalize Trade Deal

Trump Slaps 25% Tariffs on Japan and South Korea; India Given More Time to Finalize Trade Deal

Washington / New Delhi – July 8, 2025

With the clock ticking down on a critical pause in reciprocal tariffs, U.S. President Donald Trump has announced that his administration will impose 25% tariffs on imports from Japan and South Korea beginning August 1. This move marks the first of what is expected to be a wave of tariff actions targeting multiple trade partners worldwide. At the same time, India has been granted an extended window—until August 1—to finalize a pending interim trade agreement with the United States.

Tariffs as Pressure Tactic

The announcement comes just two days before a July 9 deadline, when the existing cap of 10% tariffs is set to expire. President Trump, in letters addressed to the leaders of Japan and South Korea, reiterated that any retaliatory tariffs by these countries would be met with additional levies on top of the new 25% baseline. The letters were shared on his Truth Social platform, underlining his administration’s hardline stance on trade imbalances.

While the 25% tariff on South Korea mirrors what was proposed in early April, the tariff on Japan is slightly higher—by one percentage point—than the rate initially floated. These letters represent the beginning of Trump’s broader strategy to enforce what he calls "reciprocal tariffs", which aim to match or exceed the trade barriers imposed by other nations on American goods.

A Broader Strategy in Motion

According to U.S. Treasury Secretary Scott Bessent, the administration plans to send out nearly 100 similar letters to other countries—mostly smaller trading partners—as part of its global tariff strategy. “If countries fail to act by August 1, they’ll revert to their April 2 tariff levels,” Bessent warned during a Monday interview with CNN.

He emphasized that the purpose of this aggressive timeline is to force rapid negotiations. “We saw it work with the European Union,” Bessent said, referring to a recent threat by Trump to impose 50% tariffs, which led to immediate outreach from European leaders. “We expect to see the same sense of urgency from others now.”

Although Bessent declined to specify which countries are closest to signing deals, he hinted that “several big announcements” could come within the next few days. However, he reassured that no major trading partner is expected to face the maximum proposed tariff rate of 70%, indicating that most large-scale negotiations are moving in a productive direction.

India’s Position: Negotiations Continue

India, one of America’s key strategic and economic partners, has not yet finalized a trade agreement with the U.S. Despite earlier expectations that a deal would be reached by mid-year, the negotiations have faced last-minute obstacles, pushing back the timeline.

According to senior Indian officials, the core structure of the proposed interim deal remains intact and primarily involves trade in goods, with contentious sectors such as services and labor mobility excluded from the current round of talks. The Indian negotiating team, led by Chief Negotiator and Special Secretary Rajesh Aggarwal, recently concluded a week-long round of discussions in Washington and returned to New Delhi last Friday.

One major sticking point has been agriculture. U.S. negotiators are pressing for greater market access, but India has refused to compromise on what it considers a politically and economically sensitive sector. "Agriculture is non-negotiable in this round," a government source said.

Despite the challenges, Washington has signaled its willingness to keep the door open. Officials have indicated that the August 1 date is not a hard deadline, but rather an "outer limit" meant to keep countries engaged and moving toward resolution. “The purpose is to apply pressure and get results quickly,” said Bessent.

Political Context and Strategic Relations

The unfolding trade negotiations come against a backdrop of rising global economic nationalism and shifting geopolitical alliances. Trump’s tariff campaign is aimed at correcting what he sees as longstanding trade imbalances that harm American workers and manufacturers. The U.S. administration has made clear that countries with large surpluses in trade with America must either reduce barriers or face punitive tariffs.

India’s inclusion in the strategic Asia-Pacific partnership, along with its growing economic and military ties with the U.S., places it in a unique category. White House Press Secretary Karoline Leavitt reaffirmed this relationship, calling India a “key ally” and stating that President Trump maintains a “strong personal relationship” with Prime Minister Narendra Modi.

“The President said last week that the U.S. and India are very close to finalizing a deal,” Leavitt noted during a White House press briefing. “That remains true. The Secretary of Commerce was in the Oval Office discussing it just recently. You’ll hear more from us soon.”

What Lies Ahead

As the August 1 deadline looms, all eyes remain on the remaining trading partners—especially India—to conclude agreements that can shield them from the steep tariff hikes. Although the United States has already concluded mini-deals with Britain and Vietnam, many other nations are still scrambling to avoid the trade penalties promised by the Trump administration.

For India, the coming weeks are critical. Failure to finalize the deal i such as textiles, chemicals, and machinery. However, given the mutual interests at stake and the continuing dialogue, both Washington and New Delhi appear committed to finding common ground.

If successful, the India-U.S. trade agreement would serve as a significant milestone in the evolving economic partnership between the world’s two largest democracies—at a time when global trade frameworks are under increasing strain.