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Trump unveils 25% tariffs on Japan, South Korea

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Japan's yen, South Korean won struggle to recover from

losses

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Concerns over global economic outlook persist

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RBA expected to cut rates on July 8

By Rae Wee

SINGAPORE, July 8 (Reuters) - The yen fell broadly on

Tuesday while the dollar held steady as U.S. President Donald

Trump unveiled 25% tariffs on goods from Japan and South Korea

in the latest development of his chaotic trade war.

Trump on Monday began telling trade partners - from

powerhouse suppliers like Japan and South Korea to minor players

- that sharply higher U.S. tariffs will start August 1. He later

said that he was open to extensions if countries made proposals.

The announcement rattled investor sentiment, sending the

Japanese yen and South Korean won down roughly 1% overnight.

Both currencies remained under pressure early on Tuesday,

with the yen falling to a two-week low of 146.44 per

dollar. The won rose 0.4% to 1370.20 per dollar.

Investors entered the week with much confusion over Trump's

tariff plans ahead of an initial July 9 deadline. While the new

August 1 date offers a brief reprieve, the outlook remains

uncertain and global economic concerns persist.

"There is still a lot of uncertainty as to where tariff

rates will eventually settle and which countries will get what

rates, so uncertainty about the global economy is still high and

that will keep investors on edge for the time being," said Carol

Kong, a currency strategist at Commonwealth Bank of Australia.

"This is just the start and we'll get more headlines out for

sure over the coming days."

Japanese Prime Minister Shigeru Ishiba said on Tuesday that

Japan would continue negotiations with the United States to seek

a trade deal that benefits both countries.

South Korea has said it plans to intensify trade talks with

the U.S. and views Trump's plan for a 25% tariff from August 1

as effectively extending a grace period on implementing

reciprocal tariffs.

Other currencies meanwhile gained some ground on Tuesday,

after sliding in the prior session when the dollar rebounded.

The euro was up 0.27% to $1.1741 after having slid

0.67% on Monday, while sterling edged up 0.17% to

$1.3626.

The European Union will not receive a letter from the United

States setting out higher tariffs, EU sources familiar with the

matter told Reuters on Monday, and is eyeing possible exemptions

from the U.S. baseline levy of 10%.

DOLLAR HOLDS GAINS

Against a basket of currencies, the dollar was little

changed at 97.40, holding on to most of its gains from Monday

when it rose 0.5%.

The Australian dollar last traded 0.32% higher at

$0.6513, having tumbled 0.9% in the previous session as risk

appetite soured.

The New Zealand dollar advanced 0.22% to $0.6015,

reversing some of Monday's 0.8% fall.

The Reserve Bank of Australia announces its rate decision

later on Tuesday, where expectations are for the central bank to

deliver another rate cut owing to easing inflation and a slowing

economy.

"Given the ever-shifting balance of risks and the heightened

uncertainty it creates for hiring and investment in the

Australian economy, more RBA cuts are set to follow," said Carl

Ang, fixed income research analyst at MFS Investment Management.

"A 3.1% terminal rate by early 2026 remains the base case

for this RBA cutting cycle."