Trump tariffs predict more economical problems for South Korea and Japan

In the first batch of “tariff letters” sent to trading partners, US President Donald Trump aims at the next two US allies in Asia: Japan and South Korea – both already carry the main blow to existing duties on car and steel.

Additional tariffs will also harm these two export economies that fight growth slowing, and Japan is likely to look at the technical recession, or two direct quarters of economic reduction.

Both Japan and South Korea He saw that first and foremost a quarter contract.

While South Korean imports in the US threaten 25% tariffs, just like Trump, promised in April, the rate in Japan was raised by 1 percentage up to 25%.

Exports – including services – consists almost 22% of Japan’s GDP in 2023According to the latest data of the World Bank, and 44% of South Korea’s GDP in 2023.

Currently, car imports and auto parts in the US carries a 25% tariff, while steel and aluminum are attracted to 50% fee in most countries.

Cars are Japan’s largest exports to the US, as well as South Korea’s exports. South Korea was also The fourth largest exporter has become in the US In 2024, according to international trade in the US trade department.

Prime Minister Japan Shigeru Ishiba As reported, said The country “actively strives for an agreement that benefits both countries, defending Japan’s national interest.” In May, said Isaib that his country does not accept such a deal that does not see the removal of the authors.

According to Norihiro Yamaguchi, the recently announced tariffs will reduce Japan’s GDP by 0.1 percentage, heads the Japanese economist in Oxford Economics.

“Given that the economy is already indefinitely suffering from high tariffs for automatic and increased global trade policies, as well as poor consumption, the impact cannot be rejected,” he said CNBC

Yamaguchyu said the Japanese economy “barely grows” in the second half of 2025 and in the first half of 2026, if he did not get into the recession.

US is the largest export market of Japan, with 21.3 trillion yen ($ 145.76 billion) to the country in 2024 South Korea exported goods worth $ 127.8 billion to the US In the same year, the US is the second largest export market.

Reflecting “more enhanced tariff policy”, Bank of Korea in May Almost halved GDP growth estimates by 2025 to 0.8% from 1.5% in February.

“The restoration of domestic demand has been delayed, while the export growth is expected further, with the influence of tariffs in the US,” the side said.

Frederick Neuman, Chief Economist of Asia HSBC, said CNBC that if Japan and South Korea will not be able to agree, these tariffs will create “significant winds for growth”.

Both Japan and South Korea are already facing sluggish domestic demand.

Offering a silver lining, Trump said he was ready “perhaps consider the possibility of adjusting this letter” if the countries have to open its markets “closed” markets for the United States

Pressure tactics are brought to South Korea and Japan, said Vishno Varatan, director of Mizuho Securities.

“Disappointment is a more fundamental and holistic approach of Japan (illuminating industry tariffs), which delays the transaction is a source of disappointment for the US trade participants, and most importantly for Trump, says for itself.” He added.

While Trump has not publicly expressed anger to South Korea, Varatan said that “it is impossible to imagine that there are points similar to Japan and thus referring to the letter.”

Meanwhile, the markets shake off tariff threats – yet. Neumann HSBC said Trump’s letters Essentially, it is a three -week lengthening period for tariff talks.

“Financial markets accept the latest news in their step, focusing on the possibility that tariff threats can still be lifted through negotiations,” he said.