In 2025, the United States, under President Donald Trump’s administration, introduced a series of reciprocal tariffs targeting major trading partners, including Japan and South Korea. These tariffs, described as a response to persistent U.S. trade deficits and perceived non-reciprocal trade practices, mark a significant escalation in U.S. trade policy. This article examines the latest developments in these tariffs, provides a detailed breakdown of the U.S.-Japan and U.S.-South Korea trade relationships over the past three years, identifies major traded products, and analyzes the potential impacts of these tariffs on bilateral trade.

Latest Developments in U.S. Reciprocal Tariffs

On April 2, 2025, President Trump declared a “national emergency” to address the U.S.’s $1.2 trillion goods trade deficit, invoking the International Emergency Economic Powers Act (IEEPA). He announced a 10% baseline tariff on all imports from April 5, 2025, and higher reciprocal tariffs on 54 countries, including Japan (24%) and South Korea (25%), effective April 9, 2025. These tariffs were calculated based on the U.S. trade deficit with each country divided by their exports to the U.S., halved to reflect a “kind” approach.

Following global market turmoil and negotiations, Trump issued a 90-day pause on April 9, 2025, reducing these tariffs to the 10% baseline for most countries, including Japan and South Korea. However, on July 7, 2025, Trump announced via social media that, effective August 1, 2025, Japan and South Korea would face 25% tariffs on their exports to the U.S. unless trade agreements were reached. Letters to the leaders of both countries warned against retaliatory tariffs, threatening matching increases if imposed, and offered potential tariff adjustments if trade barriers were eliminated.

The White House emphasized that these tariffs aim to address “long-term and persistent” trade deficits, encouraging foreign companies to manufacture in the U.S. to avoid duties. An executive order delayed the tariff reimposition from July 9 to August 1, 2025, to allow further negotiations.

Japan and South Korea, key U.S. allies, expressed concern. Japanese Prime Minister Shigeru Ishiba called the tariffs a “national crisis,” noting their impact on Japan’s economy, while South Korea’s trade ministry sought to downplay claims of a joint response with China. Both countries are negotiating with the U.S., with Japan prioritizing cabinet-level talks and South Korea engaging in technical discussions, though no breakthroughs have been reported.

U.S.-Japan Trade Relationship (2022–2024)

The U.S. and Japan maintain a robust trade relationship, with Japan being one of the U.S.’s top trading partners.

Below is a breakdown of goods trade (in billions of USD) based on U.S. Census Bureau data:

2022:

U.S. Exports to Japan: $80.4 billion

U.S. Imports from Japan: $148.1 billion

Trade Deficit: $67.7 billion

2023:

U.S. Exports to Japan: $80.6 billion

U.S. Imports from Japan: $144.0 billion

Trade Deficit: $63.4 billion

2024:

U.S. Exports to Japan: $81.8 billion

U.S. Imports from Japan: $148.0 billion

Trade Deficit: $66.2 billion

Major U.S. Exports to Japan:

Agricultural products (soybeans, corn, pork, beef): ~$14 billion annually

Aircraft and parts: ~$8 billion

Liquefied natural gas (LNG) and energy products: ~$7 billion

Pharmaceuticals and medical equipment: ~$6 billion

Major U.S. Imports from Japan:

Passenger vehicles and light trucks: ~$54 billion (1.4 million vehicles in 2024)

Auto parts: ~$12 billion

Machinery (industrial, electrical): ~$20 billion

Chemicals and medical instruments: ~$10 billion

U.S.-South Korea Trade Relationship (2022–2024)

The U.S.-South Korea trade relationship operates under the U.S.-Korea Free Trade Agreement (KORUS FTA), which eliminates most tariffs on bilateral trade.

Below is the trade breakdown (in billions of USD):

2022:

U.S. Exports to South Korea: $71.5 billion

U.S. Imports from South Korea: $115.3 billion

Trade Deficit: $43.8 billion

2023:

U.S. Exports to South Korea: $73.8 billion

U.S. Imports from South Korea: $118.2 billion

Trade Deficit: $44.4 billion

2024:

U.S. Exports to South Korea: $74.9 billion

U.S. Imports from South Korea: $126.4 billion

Trade Deficit: $51.5 billion

Major U.S. Exports to South Korea:

Agricultural products (beef, soybeans, corn): ~$9 billion

Machinery and equipment: ~$10 billion

Aircraft and parts: ~$7 billion

Energy products (LNG, crude oil): ~$8 billion

Major U.S. Imports from South Korea:

Passenger vehicles: ~$40 billion (1.5 million vehicles in 2024)

Electronics (semiconductors, smartphones): ~$20 billion

Auto parts: ~$10 billion

Steel and aluminum products: ~$5 billion

Impact of Reciprocal Tariffs on Trade

The 25% tariffs on Japan and South Korea, effective August 1, 2025, unless negotiated otherwise, are poised to significantly disrupt bilateral trade. Key impacts include:Increased Costs for U.S. Consumers and Businesses:Tariffs on Japanese and South Korean vehicles, which account for ~8.6% of U.S. auto sales, will raise prices. For example, a $30,000 imported car could cost an additional $7,500.

Auto parts tariffs will increase production costs for Hyundai, Kia, and Toyota’s U.S. plants, which rely on imported components (Hyundai: 12% from U.S./Canada; Kia: 20%). This could lead to higher vehicle prices or reduced profit margins.

Electronics and machinery tariffs will affect U.S. industries reliant on South Korean semiconductors and Japanese precision equipment, potentially disrupting supply chains.

Economic Strain on Japan and South Korea:

Japan’s auto industry, exporting ~$54 billion to the U.S., faces a “national crisis,” with the Bank of Japan noting a one-year low in manufacturing sentiment.

South Korea’s auto and electronics sectors, with ~$60 billion in U.S. exports, are vulnerable. Hyundai and Kia, selling 1.7 million vehicles in the U.S. in 2024, may face reduced demand or need to shift production to U.S. facilities, incurring significant costs.

Both countries may accelerate regional trade integration, such as the Japan-South Korea-China free trade agreement or the Regional Comprehensive Economic Partnership (RCEP), to offset U.S. market losses.

Potential Retaliation and Trade War Risks:

Trump’s letters warn that retaliatory tariffs will trigger matching U.S. increases, risking a tit-for-tat escalation.

South Korea, with near-zero tariffs on U.S. goods under KORUS FTA, has limited leverage to offer concessions, complicating negotiations. Japan faces similar challenges, with its rice market and auto exports remaining contentious.

Retaliatory measures could disrupt U.S. agricultural exports (~$23 billion combined to both countries), affecting American farmers.

Global Supply Chain and Economic Implications:

Tariffs may incentivize Japanese and South Korean firms to relocate manufacturing to the U.S., as Trump suggested, but such shifts require years and significant investment.

J.P. Morgan estimates a 60% chance of a global recession by year-end 2025 due to tariff-induced uncertainty, with U.S. GDP growth potentially halved.

The IMF and global leaders warn of disrupted trade flows, higher inflation, and strained alliances, particularly as Japan and South Korea host major U.S. military bases.

Conclusion

The U.S.’s reciprocal tariffs on Japan and South Korea reflect a bold attempt to address trade deficits but risk escalating tensions with key allies. Over the past three years, the U.S. has maintained significant trade deficits with both countries, driven by imports of vehicles, electronics, and machinery, while exporting agricultural and energy products. The 25% tariffs, set for August 1, 2025, will likely increase costs for U.S. consumers, strain Japanese and South Korean economies, and disrupt global supply chains. While negotiations may mitigate some impacts, the threat of retaliation and economic uncertainty looms large. Japan and South Korea may pivot toward regional trade blocs, while the U.S. faces the challenge of balancing protectionism with alliance diplomacy. The coming months will be critical in determining whether these tariffs reshape global trade or spark broader economic conflict.