Quick overview

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US President Donald Trump announced 25 percent tariffs on goods from South Korea and Japan, which caused the Japanese yen to fall broadly on Tuesday while the dollar remained stable.

Trump began informing allies on Monday that the United States would start imposing significantly higher tariffs on August 1st, affecting major suppliers like South Korea and Japan as well as smaller players.

Investor sentiment was shaken by the announcement, leading the South Korean won and Japanese yen to drop by about 1% overnight.

Early Tuesday, pressure on both currencies continued, with the yen falling to a two-week low of 146.44 to the dollar.

The Won increased by 0.4 percent to 1370 points per dollar. As the July 9 deadline approached, investors were largely confused by Trump’s tariff plans at the start of the week.

Although the revised August 1st date offers a short breather, questions and concerns about the global economy remain. Investors will stay cautious because much uncertainty lingers regarding the global economy, where tariff rates will settle, and which countries will receive what rates.

Japanese Prime Minister Shigeru Ishiba announced that Japan will continue negotiations with the US to reach a mutually beneficial trade deal.

South Korea views Trump’s proposal for a 25 percent tariff starting August 1 as mainly a prolongation of the grace period for reciprocal tariffs, and the country plans to intensify trade talks with the US.