U.S. trading partners are weighing up their responses after President Donald Trump’s latest action on tariffs sparked a stock market selloff Monday.
The White House sent letters yesterday to about a dozen countries laying out the rates at which imports would be taxed—ranging from 25% to 40%—if no other trade agreements are reached. The letters also explained that goods shipped through third countries to avoid tariffs would still face the same levies, and that the rates would go up if partners retaliated. The new taxes are set to come into force on Aug. 1, an extension of the previous July 9 deadline.
China, which agreed in June on a broad framework for trade but has yet to finalize a more permanent agreement, has a slightly later deadline of Aug. 12. A state-sponsored media outlet said Tuesday that the country should oppose any deal that hurts Chinese interests, such as incentives to cut China out of supply chains, according to a report by Reuters.
Japan’s Prime Minister Shigeru Ishiba said Tuesday he would continue negotiations with the White House. Trump singled out Japan last week as one country that has been tough to work with and which is unlikely to get a deal by the deadline.
The next big question is what kind of arrangement will be reached with the European Union, which didn’t receive a letter. A spokesperson for the EU said Monday that he was hoping for a deal before the deadline.
The return of tariff volatility sent stocks tumbling on Monday with the three main indexes ending the day in negative territory. The Dow fell 422 points, or 0.9%. The S&P 500 dropped 0.8%. The Nasdaq Composite closed down 0.9%.
