Nations Race to Negotiate as U.S. Imposes New Tariffs, Sparking Economic Concerns

Japan and South Korea, both major Asian economies, announced plans to negotiate with the United States to mitigate the impact of the increased tariffs President Trump intends to implement.

President Trump recently escalated the trade war, informing 14 nations that they would face tariffs ranging from 25% to 40%. However, the delayed start date of August 1st provides a three-week window for countries to seek more favorable terms, while also prolonging uncertainty in trade relations.

Stephen Miran, from the White House Council of Economic Advisers, expressed optimism about potential trade deals before the end of the week. He emphasized that other countries must make concessions to convince the President that the deals are beneficial for the United States.

Japan is seeking concessions for its automobile industry, according to top trade negotiator Ryosei Akazawa. Akazawa held a phone call with U.S. Commerce Secretary Howard Lutnick to continue negotiations. However, he stated that Japan would not compromise its agriculture sector for a quick deal. South Korea also plans to intensify trade talks in the coming weeks to achieve a mutually beneficial outcome.

Global stocks showed a muted reaction to the latest tariff developments, but the yen declined due to the prospect of duties on Japanese goods. Economists cautioned that the ongoing tariff disputes could hinder economic growth and increase prices, posing challenges for policymakers.

The Yale Budget Lab estimates that consumers in the U.S. face an effective tariff rate of 17.6%, the highest since 1934, following the announcement of new tariffs. Goldman Sachs estimates that the recent actions will add 1.4 percentage points to the U.S. effective tariff rate.

The European Union, the largest U.S. trade partner, aims to reach a deal before August 1st, focusing on "rebalancing" and concessions for key export industries. However, German Finance Minister Lars Klingbeil warned that the EU is prepared to retaliate if necessary. Some EU sources indicated that the bloc was close to an agreement with the Trump administration, potentially involving limited concessions.

So far, only Britain and Vietnam have reached deals. A deal with India is also reportedly close. Washington and Beijing agreed to a trade framework in June, but its future remains uncertain.

The United States will impose tariffs on goods from Tunisia, Malaysia, Kazakhstan, South Africa, Bosnia and Herzegovina, Indonesia, Serbia, Bangladesh, Cambodia, Thailand, Laos, and Myanmar. Cambodia, which has been significantly affected by previous tariffs, welcomed a reduction in the tariff rate and is seeking further cuts.

The tariffs have negatively impacted Cambodia's garments and footwear sector, a major employer and economic driver. Bangladesh's ready-made garments industry, which accounts for over 80% of its export earnings and employs millions, is also facing significant challenges due to the tariffs.