Trump widens tariff pressure to Japan, South Korea, Malaysia, Indonesia, other Asian economies

US President Donald Trump announced July 7 that a 25% blanket tariff would be imposed on all imports from Japan and South Korea starting Aug. 1.

He later widened his sweeping tariff offensive, adding more countries and setting a 25% tariff on Malaysia (up from the 24% rate proposed in April), while maintaining or slightly lowering rates on Kazakhstan (25%, down from 27%), South Africa (30%, unchanged), Laos (40%, down from 48%), and Myanmar (40%, down from 44%).

Trump also broadened trade duress with new tariff proposals on Indonesia, Thailand, Bangladesh and Cambodia, alongside earlier hikes on Japan, South Korea and Malaysia.

Starting Aug. 1, Indonesian exports will face a 32% tariff, unchanged for Thailand at 36%, while rates for Bangladesh and Cambodia fall slightly to 35% and 36%, respectively.

US President told trade partners that sharply higher tariffs on food and fuel commodities were coming unless they put forward proposals. He also signaled he was open to extending deadlines if talks progress.

The declaration, made via social media posts, included what appeared to be formal letters addressed to heads of state, such as Japanese Prime Minister Ishiba Shigeru and South Korean President Lee Myung. The letters justified the tariffs as a correction to “longstanding trade imbalances” and a means to protect US industries unless new bilateral deals are reached.

Similar language appeared in his evening posts about Malaysia, South Africa and the three other nations.

Significantly, the letters clarified that the 25% tariff would be separate from additional sector-specific duties targeting key product categories. Trump also warned against attempts to circumvent the tariffs through third countries: “Goods transshipped to evade a higher Tariff will be subject to that higher Tariff,” he wrote.

Transshipping, a practice scrutinized during the 2018-2020 US-China trade conflict, involves routing goods through a third country to sidestep trade restrictions.

The announcement has triggered concern across key commodity markets such as agriculture, protein and biofuel agricultural and energy markets, particularly given the strategic importance of Japan and South Korea as export partners for US commodities.

According to the US Department of Agriculture estimates, Japan and South Korea are among the US’ top five importers of these commodities, purchasing billions of dollars worth of corn, beef, pork, wheat, ethanol and distillers’ dried grains with solubles.

South Korea also imported more than 130 million gallons of US ethanol in 2024, according to the Renewable Fuels Association.

Both countries have increased their sourcing of US-origin feedstocks such as tallow, used cooking oil (UCO), and soybean oil for renewable diesel and sustainable aviation fuel development. However, these flows could be disrupted by retaliatory tariffs or re-routing costs.

In April, Trump proposed a 10% universal tariff on most imports and announced higher country-specific rates of 24% on Japan and 26% on South Korea, though those were paused for negotiations.

The newly announced 25% tariffs now replace the suspended rates, signaling a hardening trade stance, especially against Japanese automotive and metal exports and South Korean autos and steel.

Japan and South Korea also export key agricultural inputs to the US

In 2024, Japan exported $1.2 billion in agricultural machinery, while South Korea supplied roughly $800 million in fertilizers and equipment.

Tariffs could inflate the cost of these imports, potentially raising US crop production costs by 5–10%, based on historical pass-through estimates from previous tariff cycles.

Protein sector concerns

Reduced access to Japanese and South Korean markets could oversupply US domestic markets and weigh on livestock prices.

During the 2019 US-China trade conflict, pork prices fell nearly 15% following retaliatory duties. A similar decline could play out again.

Conversely, US consumers may see rising prices for imported premium products, such as Japanese wagyu beef, which could face a 25% markup or more if sector-specific duties are also imposed.

Japan and Korea may also increase sourcing from alternative suppliers like Australia or Brazil.

In 2024, Australia expanded beef exports to Japan by 10% when US prices rose amid earlier tariff discussions.

If these countries permanently shift away from US suppliers, it could mirror the erosion of US soybean market share in China post-2018.

The anti-transshipment clause adds another layer of complexity. Countries like Vietnam, Singapore, and Malaysia, often used as transshipment or value-added processing hubs, may be forced to provide additional documentation or face penalties, driving up compliance costs and delaying shipments.

Biofuels in the crosshairs

The biofuels sector is likely to face both direct and indirect fallout. In 2024, the US imported a large amount of UCO from China, much of which was routed through Japan and South Korea for re-export.

Tariffs on those re-export routes, combined with sector-specific duties, could push UCO prices up by 15%-20%, increasing renewable diesel production costs by an estimated $0.50–$1.00 per gallon, based on historical cost pass-throughs.

The inclusion of Malaysia in the new tariffs added another layer of worry for biofuel producers. Malaysia is a key exporter of used cooking oil and palm-based residues used by US refiners to produce renewable diesel and sustainable aviation fuel.

Analysts noted that a 25% tariff on Malaysian goods could push UCO prices up by as much as 15–20%, echoing concerns about supply disruptions through Japan and Korea.

South Korea, a key growth market for US ethanol, imported over $500 million in US ethanol in 2024.

Retaliatory tariffs could impact US SAF producers, similar to Brazil’s move in April 2025, when it hiked tariffs on US ethanol following trade tensions. This could raise SAF costs and slow investment in green jet fuel projects, which are already facing scalability hurdles.

Additionally, these tariffs could worsen friction between the US agricultural and energy policies. Experts note that integrated, cross-border supply chains are essential for biofuel development. Disrupting feedstock trade flows may reduce the US’s ability to meet federal renewable fuel mandates, and increase reliance on domestic corn-based ethanol — a shift that could strain grain availability and drive up food costs.

The likely response from Japan and South Korea remains unclear. Both have previously pursued WTO complaints and diversified their suppliers in the face of US tariffs. If history repeats, this could trigger a broader trade realignment in Asia, with implications for US export competitiveness.

Platts, part of S&P Global Commodity Insights, assessed 85CL Beef CIF US at $6,173/mt on July 3, down $110/mt day on day.

Platts assessed Chicago Argo ethanol at 1.7230/gal July 3, at the level of a trade done in the Market on the Close assessment process. Platts considered an outstanding bid at $1.7140/gal and an outstanding offer at $1.7250/gal.

Platts assessed New York Harbor any-July barges at $1.8175/gal, at an unchanged 9.50-cent premium over July Chicago paper.

Tags: Japan, South Korea, Malaysia, USA