Trump sends tariff letters, placing 25% levies on top allies

The U.S. has begun sending letters to other countries, setting a tariff rate on their imports, President Trump said Monday. Why it matters: After months of threats, Trump is abruptly re-escalating the trade war.For businesses craving certainty, who've had a period of relative calm, the move could once again upset that balance.It also injects a new risk into financial markets that have largely already moved on to a post-tariff world. Driving the news: Trump posted copies of the letters to Truth Social, starting with South Korea and Japan, both of which were hit with 25% tariffs, effective Aug 1.Those tariff rates are similar to what the White House announced on the April 2 "Liberation Day," before swiftly pausing the implementation for 90 days.What they're saying: "If you wish to open your heretofore closed Trading Markets to the United States, eliminate your tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps consider an adjustment to this letter," both the letters to the South Korean and Japanese leaders say.What to watch: Trump threatened to up the ante if either country threatened to retaliate."If for any reason you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge," the letter addressed to Japan reads.There is similar language in the letter to South Korea, threatening to mirror retaliatory rates on top of the additional 25%.By the numbers: Markets initially sold off to hit session lows, but quickly recovered to just above the average price for the day. Treasuries initially sold off a bit, but have also since recovered. The Russell 2000 is the worst-performing index on the day, indicating the basket of smaller companies looks to be hit hardest when it comes to increased tariffs. Madison Mills contributed. Editor's note: This story has been updated with additional information.

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Trump sends tariff letters, placing 25% levies on top allies