US tariff measures to have grave impact on South Korean economy: Experts
Seoul, June 30 (IANS/WISHAVWARTA):- US President Donald Trump’s administration’s sweeping tariff policies are expected to have a grave impact on the South Korean economy, undermining exports and business stability of Korean companies, trade experts said Monday, calling for the Seoul government’s proactive negotiations with Washington.
Trade experts here expressed such concerns over the Trump administration’s tariff measures in a public hearing held to gather public opinions on Seoul’s potential negotiation strategy before the country begins full-fledged tariff negotiations with the US.
The public hearing was held in accordance with necessary procedures for signing a trade agreement under the Act on the Conclusion Procedure and Implementation of Commercial Treaties, according to the Ministry of Trade, Industry and Energy.
“The US administration’s hefty tariff measures can inflict structural damage on Korean industries, not only causing a decline in exports,” said Yang Joo-young, director of the office of economic security and trade strategy research at the Korea Institute for Industrial Economics & Trade.
“The US accounts for over 18 per cent of South Korea’s exports, and the survival of Korean manufacturing industries, like automobiles, semiconductors, batteries and machine equipment, is directly tied to accessibility to the US market,” she added.
Yang said access to the US market will determine Korea’s fate in the global technology war and supply chain restructuring, urging the government to seek not only tariff exemptions but also expanding bilateral industrial cooperation in key industries, such as defence, shipbuilding and energy, in trade negotiations with the US.
According to a feasibility study by the Korea Institute for International Economic Policy (KIEP), South Korea’s gross domestic product will likely decrease by 0.3 to 0.4 per cent if US tariff measures, including those yet to be imposed, fully take effect.
The Trump administration has been imposing 50 per cent duties on all steel imports and 25 per cent tariffs on imported cars while planning to levy hefty tariffs on semiconductor and pharmaceutical imports in the near future.
But if Seoul strikes a deal with Washington following Britain and China, while others fail to do so, the country may be able to recover some of the expected losses in exports, Kim Young-gui, a senior research fellow at the KIEP, said.
Officials from the agriculture and livestock industries underscored concerns over Washington’s reported call for Seoul’s lifting of agriculture-related regulations, such as an import ban on American beef from cattle aged 30 months or older.
“In particular, the cattle age issue remains highly sensitive in Korea, and even initiating discussions on the matter could spark significant political and social controversy here,” Suh Jin-kyo, president of GS&J Institute, said.
“There are also concerns that the lifting of the cattle age restriction may reinforce negative perceptions of US beef among Korean consumers, potentially leading to a decline in current US beef exports to Korea,” he explained.
In response, Chang Sung-gil, director-general for trade policy at the industry ministry, said the government has been stressing the fact in its trade consultations with Washington that the US saw a $66 billion trade deficit in goods with Korea last year, but it continues to post annual surpluses in the service and agricultural sectors.
“The US has been enjoying preferential benefits in the Korean market for its agricultural and livestock products under the countries’ bilateral free trade agreement,” Chang added, noting the government will consider the sensitivity of the issue in its negotiation strategy.
The Seoul government has been holding trade consultations with the Trump administration over the past few months, seeking to craft a package deal by July 8 — when the 90-day pause on US reciprocal tariffs will end.
South Korea is seeking to gain a full exemption or reduction of the Trump administration’s 25 per cent reciprocal tariffs for the country, as well as sectoral tariffs on steel, automobiles and other imports.
The two sides have discussed various measures to reduce Korea’s large trade surplus with the US and also address what Washington has claimed to be South Korea’s non-tariff measures that included proposed regulations for online platforms and restrictions on the export of high-precision location data, according to sources familiar with the matter.
Seoul “will pursue tariff negotiations with the US under the principle of prioritising national interest,” Vice Trade Minister Park Jong-won said.
The government plans to comprehensively review the opinions presented during the public hearing and reflect them in its negotiation strategy and report it to the National Assembly before launching full-fledged trade negotiations with the US, according to the ministry.
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