SUNS | 10 July 2025
Trump seeks to extract “payment” for reciprocal tariffs by 1 August
Geneva, 9 Jul (D. Ravi Kanth) — United States President Donald Trump on 7 July dispatched seemingly explosive tariff letters to a total of 14 countries, escalating a unilateral trade war aimed at destroying the 80-year-old multilateral trading system, said people familiar with the development.
Letters were sent to Japan, South Korea, Malaysia, Indonesia, Cambodia, Thailand, Laos, Myanmar, Bangladesh and Kazakhstan in Asia, as well as to South Africa, Tunisia, Bosnia and Herzegovina and Serbia.
Writing on his Truth Social media website on 8 July, President Trump said the seemingly extortive tariffs must be paid on 1 August.
“As per letters sent to various countries yesterday [7 July], in addition to letters that will be sent today [8 July], tomorrow [9 July], and for the next short period of time, TARIFFS WILL START BEING PAID ON AUGUST 1, 2025. There has been no change to this date, and there will be no change. In other words, all money will be due and payable starting AUGUST 1, 2025 – No extensions will be granted. Thank you for your attention to this matter!”
It is somewhat bewildering whether the above threat is being made by the head of the world’s oldest constitutional democracy or a colonial enterprise such as the East India Company, founded in 1600, said people familiar with the development.
The Trump administration’s trade war appears to be replete with geopolitical and geoeconomic undertones in which countries with strong links with China in Asia are being severely punished.
On 8 July, President Trump reiterated his opposition against BRICS (Brazil, Russia, India, China, South Africa plus six new members) by suggesting that the coalition was set up to “degenerate” and “destroy” the US dollar “so that another country can take over and be the standard,” according to media reports.
“And that’s OK if they want to play that game, but I can play that game too. So, anybody that’s in BRICS is getting a 10 per cent charge … If they are a member of BRICS, they are going to have to pay 10 per cent tariff, just for that one thing. And they won’t be a member (for) long,” he said, claiming that the collective had “largely” broken up after his warning last year and was not a “serious threat”.
“…if we lost the world standard dollar, that would be like losing a war, a major world war. We would not be the same country any longer. We are not going to let that happen… The dollar is king. We are going to keep it that way. If people want to challenge it, they can. But they are going to have to pay a big price. And I don’t think any of them are willing to pay that price,” he added.
President Trump also threatened to impose a 50% tariff on imports of copper, which spiked global copper prices.
More disturbingly, under the seemingly dubious notion of settling the US trade deficits with the 14 countries mentioned above, the US appears to be imposing a radical set of trade policy changes that could destroy the policy space of countries across the world, said people familiar with the development.
As compared to the so-called “Liberation Day” reciprocal tariffs that President Trump announced on 2 April, the new tariffs, which have been paused until 1 August, have slightly reduced rates in some cases, while retaining the same level of tariffs as imposed on 2 April in other cases.
The tariff letters sent by President Trump to the 14 countries also carry the proverbial “Damocles Sword”, with seemingly “extortionary” threats that these countries will be severely punished with even higher tariffs should they retaliate against the US.
“If you want to play ball, this is what you have to pay,” President Trump said at a press conference with Israeli Prime Minister Benjamin Netanyahu on 8 July. “As far as I’m concerned, we’re done … we’re sending out letters to various countries telling them how much tariffs they have to pay.”
Friends of Washington like India are being greeted with initial agreements, though at a seemingly costly payment in terms of prying open the Indian market for American goods while dealing a deadly blow to India’s exports to the United States of steel and aluminum products, auto and auto parts, as well as the likely upcoming US tariffs on generic drugs and other products, said people familiar with the development.
The Trump administration seems to have softened its rather aggressive tariff approach against the European Union, closing in on a possible outline of an agreement.
Given the conflicting demands for the deal within the EU-member countries, it is being suggested that any deal is expected to retain the 10% tariffs for most European goods, people familiar with the matter said, according to a Wall Street Journal report on 8 July.
There is, however, no clarity yet on any relief for the EU automotive and steel sectors, which already face tariffs of 25% and 50%, respectively.
The European Commission on 7 July told member states that it would continue negotiating with the US ahead of the 9 July deadline on the reciprocal tariffs that President Trump had previously set, people briefed on the meeting said.
According to the WSJ report, “the White House, meanwhile, said Trump was extending a pause on higher tariffs to Aug. 1, effectively giving the EU and other trading partners more time.”
European Commission officials told members that the bloc’s options boil down to accepting an agreement that heavily favours the US or rejecting a deal and face more unpredictability, an EU diplomat said.
Even the erstwhile close US allies like Japan and Korea are also being subjected to sectoral tariffs of 50% on steel and aluminum and 25% tariffs on autos and auto parts.
A US official apparently said that the goods that were already subjected to sectoral tariffs, such as vehicles and metals, would not be affected by the new rates outlined by President Trump, according to a report in the Financial Times of 8 July.
Other officials have said that more deals could be announced in the coming days. “The administration – the president and his trade team – want to cut the best deals for the American people and the American worker,” White House press secretary Karoline Leavitt said, adding that the delay in the deadline is in the “best interest” of the country.
The tariff letters carried a somewhat innocuous plea: “Please understand that these Tariffs are necessary to correct the many years of … Tariff, and Non Tariff Policies and Trade Barriers, causing these unsustainable Trade Deficits against the United States.”
The varying levels of tariff rates of 25-40% announced by the US, particularly against the least-developed countries, signal a new phase of re-drawing the global trade map, said people familiar with the development.
As reported in the SUNS, a former Indian government official on tariff policy rightly guessed that President Trump will marginally reduce the tariffs from the original reciprocal tariffs he announced on 2 April.
Barring the three framework trade deals with the United Kingdom, China, and Vietnam, the latest US tariffs on the 14 countries seem pretty close to the reciprocal tariffs announced on “Liberation Day” on 2 April.
President Trump started by sending letters in the first half of 7 July to Japan with a new tariff rate of 25% compared to the initial rate of 24% announced on 2 April.
Korea faces a new tariff of 25% as compared to the initial rate of 26%, while Malaysia faces a new tariff of 25% as against the initial rate of 24%.
Later in the second half of 7 July, President Trump posted on his Truth Social website tariff letters that he sent to Indonesia, Cambodia, Thailand, Laos, Myanmar, Bangladesh, Tunisia, Bosnia and Herzegovina, Kazakhstan and Serbia.
For Indonesia, President Trump’s letter suggests a new tariff of 32% as compared to the initial rate of 32% announced on 2 April, signalling no change.
Thailand, according to President Trump’s letter, will be subjected to a new tariff of 36% as compared to the initial rate of 36% announced on 2 April, also signalling no change.
Cambodia, a least developed country (LDC), is being subjected to a new tariff of 36% as compared to the initial rate of 49% announced on 2 April.
Laos, also an LDC, will face a new tariff of 40% as compared to the initial rate of 48%, while Myanmar will face a new tariff of 40% as compared to the initial rate of 44%. Bangladesh, yet another LDC, will face a new tariff of 35%, as compared to the initial rate of 37% announced on 2 April.
South Africa will face a new tariff of 30% as compared to the initial rate of 31% announced on 2 April, while Tunisia will face a new tariff of 25% as compared to the initial rate of 28%.
Bosnia and Herzegovina will face a new tariff of 30% as compared to the initial rate of 35% announced on 2 April, while Serbia will face a new tariff of 35% as compared to the initial rate of 37%.
President Trump said that the new tariffs will be implemented if these countries fail to reach agreements with the US by 1 August, adding that if these countries opened their markets to the US, “we will, perhaps, consider an adjustment … These tariffs may be modified, upward or downward, depending on our relationship with your country.”
Continuing its seemingly “extortionary” tariff spree, the Trump administration is planning to dispatch more letters without any delay.
“We are going to have several announcements in the next 48 hours,” US Treasury Secretary Scott Bessent said on 7 July morning on CNBC.
According to President Trump’s former Commerce Secretary Wilbur Ross, “the president was moving the goal posts for imposing tariffs while also trying to up the ante by issuing statements reminding world leaders of his pending levies.”
“Effectively what he has done has said this is what the tariffs will be if [other countries] don’t do something different,” Ross said, adding that the original 9 July deadline was “very, very hard to achieve,” according to a report in the WSJ on 8 July.
Meanwhile, asked on 8 July about President Trump’s move to send letters threatening major trading partners with high tariffs, though he postponed the tariff measures to 1 August, as well as the latest progress in the China-US trade talks, Mao Ning, spokesperson for China’s Ministry of Foreign Affairs, said: “There are no winners in trade or tariff wars, and protectionism harms the interests of all parties.”
Mao, however, referred the question about the China-US trade talks to the competent authorities.