Trump cuts tariffs in deals with Japan and others, but Asia braces for economic fallout
A deal with China is under negotiation, with U.S. Treasury Secretary Scott Bessent saying an Aug. 12 deadline might be postponed again to allow more time for talks.
Steep tariffs on U.S. imports of steel and aluminum remain, however, and many other countries, including South Korea and Thailand, have yet to clinch agreements. Overall, economists say the tariffs inevitably will dent growth in Asia and the world.
The deals reached so far, ahead of Trump's Aug. 1 deadline
Trump and Japanese Prime Minister Shigeru Ishiba announced a deal Wednesday that will impose 15% tariffs on U.S. imports from Japan, down from Trump's proposed 25% 'reciprocal' tariffs.
It was a huge relief for automakers like Toyota Motor Corp. and Honda, whose shares jumped by double digits in Tokyo. Trump also announced trade deals with the Philippines and Indonesia. After meeting with Philippine President Ferdinand Marcos, Jr., Trump said the import tax on products from his country would be subject to a 19% tariff, down just 1% from the earlier threat of a 20% tariff.
Indonesia also will face a 19% tariff, down from the 32% rate Trump had recently said would apply, and it committed to eliminating nearly all of its trade barriers for imports of American goods. Earlier, Trump announced that Vietnam's exports would face a 20% tariff, with double that rate for goods transshipped from China, though there has been no formal announcement.
Talks with China may be extended
Negotiations with China are subject to an Aug. 12 deadline, but it's likely to be extended, Bessent told Fox Business on Tuesday. He said the two sides were due to hold another round of talks, this time in Sweden, early next week. Meanwhile, Trump said a trip to China may happen soon, hinting at efforts to stabilize U.S.-China trade relations.
A preliminary agreement announced in June paved the way for China to lift some restrictions on its exports of rare earths, minerals critical for high technology and other manufacturing. In May, the U.S. agreed to drop Trump's 145% tariff rate on Chinese goods to 30% for 90 days, while China agreed to lower its 125% rate on U.S. goods to 10%. The reprieve allowed companies more time to rush to try to beat the potentially higher tariffs, giving a boost to Chinese exports and alleviating some of the pressure on its manufacturing sector. But prolonged uncertainty over what Trump might do has left companies wary about committing to further investment in China.
No deals yet for South Korea and other Asian countries
Pressure is mounting on some countries in Asia and elsewhere as the Aug. 1 deadline for striking deals approaches.
Trump sent letters, posted on Truth Social, outlining higher tariffs some countries will face if they fail to reach agreements. He said they'd face even higher tariffs if they retaliate by raising their own import duties. South Korea's is set at 25%. Imports from Myanmar and Laos would be taxed at 40%, Cambodia and Thailand at 36%, Serbia and Bangladesh at 35%, South Africa and Bosnia and Herzegovina at 30% and Kazakhstan, Malaysia and Tunisia at 25%.
The status of talks with India remains unclear but progress appears to hinge on the country's heavily protected farm sector. It faces a 26% tariff.
Nearly every country has faced a minimum 10% levy on goods entering the U.S. since April, on top of other sectoral levies.
Economists expect tariffs to sap growth even with trade deals
Even after Trump has pulled back from the harshest of his threatened tariffs, the onslaught of uncertainty and higher costs for both manufacturers and consumers has raised risks for the regional and global economy. Economists have been downgrading their estimates for growth in 2025 and beyond.
The Asian Development Bank said Wednesday it had cut its growth estimate for economies in developing Asia and the Pacific to 4.7% in 2025 and 4.6% in 2026, down 0.2 percentage points and 0.1 percentage points.
The outlook for the region could be further dimmed by an escalation of tariffs and trade friction, it said. 'Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices,' as well as a deterioration in China's ailing property market.
Economists at AMRO were less optimistic, expecting growth for Southeast Asia and other major economies in Asia at 3.8% in 2025 and 3.6% next year.
While countries in the region have moved to protect their economies from Trump's trade shock, they face significant uncertainties, said AMRO's chief economist, Dong He.
'Uneven progress in tariff negotiations and the potential expansion of tariffs to additional products could further disrupt trade activities and weigh on growth for the region,' he said.
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