Breaking: Trump Administration Imposes New Tariffs on Japan, South Korea Amid Economic Slowdown Fears

The Trump administration announced new 25% tariffs on imports from Japan and South Korea on Monday, July 7, 2025, set to take effect on August 1st. The move, revealed during a White House press briefing, targets two of America’s closest Asian allies already grappling with existing duties and economic headwinds.

These additional tariffs are expected to deepen economic woes for the export-dependent nations. Japan, already facing a potential technical recession, could see its GDP shrink by an additional 0.1 percentage point by the end of 2026, according to Norihiro Yamaguchi, Lead Japan Economist at Oxford Economics. Yamaguchi warned that Japan’s economy will “barely grow” in the latter half of 2025 and early 2026, potentially falling into recession.

South Korea, whose exports constituted 44% of its GDP in 2023, faces similar challenges. The Bank of Korea in May nearly halved its 2025 GDP growth estimate to 0.8%, citing the anticipated impact of U.S. tariffs on export growth and delayed domestic demand recovery.

The new levies primarily target automobiles and auto parts, which are major exports for both countries. While South Korea’s tariff rate remains at 25% as previously indicated, Japan’s rate has been increased by one percentage point to 25%.

Japanese Prime Minister Shigeru Ishiba has stated the country will “actively seek the chance of an agreement that benefits both countries,” but previously vowed not to accept a deal without the removal of auto tariffs. Experts like HSBC’s Chief Asia Economist Frederic Neumann warn that failure to reach a deal will pose “considerable headwinds to growth” for both nations, which are already experiencing sluggish domestic demand.

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