Seoul: The Korean industrial community on Thursday expressed approval of the latest trade agreement between South Korea and the United States, which reduced Washington's reciprocal tariff on South Korean goods to 15 percent. However, businesses remain cautious regarding the specifics of the deal and its potential impact on various sectors.
According to Yonhap News Agency, earlier in the day, both South Korean and U.S. governments announced their agreement to cut reciprocal tariffs to 15 percent, down from the initially planned 25 percent, which were set to be implemented on Friday. This decision has been particularly well-received by the Korean automotive and battery sectors, as the agreement also lowers the U.S.' sector-specific tariffs on vehicles from South Korea to 15 percent from the current 25 percent. Automobiles are a significant export item for South Korea to the U.S.
In 2024, South Korea exported $34.7 billion worth of automobiles to the United States, representing 27 percent of its total shipments to the U.S., which amounted to $127.8 billion. Hyundai Motor Group, which sold 1.7 million Korean-made cars in the U.S. last year, stated, "We plan to pursue various measures to minimize the impact of tariffs while further strengthening our internal capabilities through enhancing quality and brand competitiveness and technological innovation." The company had previously announced plans to invest $21 billion in the U.S. by 2028, including $6.1 billion in steel, components, and logistics.
Battery manufacturers also indicated their plans to boost business expansion in the U.S. "Now that the uncertainty has been lifted, we will accelerate investments to target the U.S. market," said an official from a local battery company. "After reviewing the detailed terms of the agreement, we will conduct business impact analyses and prepare response strategies."
The semiconductor industry responded positively to the inclusion of the most-favored-nation treatment for Korean chips and pharmaceuticals. Industry officials believe this provision could ensure fair treatment when the U.S. announces the outcome of its national security investigation into semiconductor imports, which may introduce new tariffs. "This idea of being treated no less favorably than other countries is a welcome signal," said an official from a local chipmaker. The industry plans to continue monitoring the situation for a better understanding of the agreement's implementation.
In contrast, the steel industry expressed disappointment, as the deal maintained the 50 percent tariffs on Korean steel products. "Because of these tariffs, we are forced to price our products higher than U.S. rivals, making it nearly impossible to export," an executive at a major steel company stated. Another official urged the government to support the steel sector, which is struggling to maintain its premium product strategy amid declining price competitiveness.
Experts have called for further negotiations on steel tariffs before the upcoming summit between South Korean President Lee Jae Myung and U.S. President Donald Trump, scheduled to take place in Washington in two weeks. "For the coming two weeks, the government needs to refine the trade deal in a way to protect our national interests," said Professor Heo Yoon from Sogang University.