The White House sent letters to warn countries about reaching trade deals before President Trump's 90-day tariff pause expires. CBS News MoneyWatch correspondent Kelly O'Grady has the latest on how markets are reacting to the newest tariff threats.

Washington

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

The White House has issued letters to several countries, including Japan and South Korea, warning that goods from these nations could face 25% tariffs if trade agreements are not finalized before the end of a 90-day pause. This move has led to a visible decline in the Dow and increased volatility in financial markets, as investors react to the heightened uncertainty.

While the market's response has not matched the sharp declines seen during previous tariff announcements, analysts note that further volatility could occur if similar measures are extended to other major trading partners such as China, Canada, or Mexico. The administration's approach suggests that August 1 is now viewed as the critical deadline for these potential tariff increases.

Markets react to Trump administration's newest tariff threats

CBS News 24-7 watching your wallet right now. We are looking at the big board that is in real time. The Dow is down quite a bit at that. These numbers are worth watching ahead of a key tariff deadline happening Wednesday. So think about this week like a clock. The clock is winding down for U.S. trading partners to seal the deal on trade. The message from the White House to the countries who cannot get the job done, higher tariffs could start August 1st. So let's bring in CBS News Money Watch correspondent Kelly O'Grady on a Monday. Kelly, the White House has sent out those letters saying goods from Japan and South Korea will be taxed at what, 25% August 1? So my question, when the president first announced those steeper tariffs back in April, we saw financial markets react quickly. Will we see the same? So I don't think you're gonna see the same extent that you saw from the market back in April. I mean, we had some of the worst days, if you remember back in April, going back to COVID, March, 2020, when things were really volatile. And so you see how the market is reacting today, even before those letters were sent out regarding Japan and South Korea, you already saw some of that uncertainty and fear creeping into the market. And you can actually see, if you're looking at the screen right now, viewers, there's that big line where the Dow actually dropped even further. That is right when the president sent out those letters and he posted on True Social. So you do see a meaningful reaction in how investors are digesting all of this. That being said, a lot of the investors that I've spoken to are, okay, we've been here before. We have seen the tariff rate move. We have seen the deadlines pushed out. I think where you're gonna see a big reaction from the market is if there's a big swing with a country like China, where we do a lot of our trading with, same with Canada or Mexico. And remember, July 9th, yes, it's a deadline, but now it really seems like August 1st is the deadline. And the last thing that I'll highlight though, Reed, which could give credence to maybe there's some coming investor reaction, is I go back. You remember the day that the president was announcing these reciprocal tariffs, as the White House is calling it? And he had that chart, and I think we actually have it, that we can pull up for you. And it showed the reciprocal tariff rate that the United States was going to place on these other countries. Japan and South Korea were both right around 25%. I just went and I looked it up. And so what that makes me wonder is, is this 25% tariffs that the president is sending out to these countries, is that going to be something like a baseline across the board? Or are we going to see, if you're looking at that tariff chart, Taiwan over 30%, and is it going to be more back to what we saw in April? If we were to reach that point, Reed, obviously we haven't seen all the letters come out. That's where I think you could see investor reaction get a little more volatile. All right, Kelly O'Grady, we know you're watching it closely. Both of those columns, tariffs charge the United States, tariffs to the United States will charge the other nations. I do think it's going to be fascinating to see if there's any change in those numbers. Good to see you, my friend. I hope you had a good weekend.

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Markets react to Trump administration's newest tariff threats

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