Seoul: U.S. President Donald Trump's administration's expansive tariff policies are projected to significantly impact the South Korean economy, potentially destabilizing exports and business operations for Korean enterprises. Trade experts are urging the Seoul government to engage in proactive negotiations with Washington.
According to Yonhap News Agency, these concerns were highlighted by trade experts during a public hearing. The event aimed to gather public input on Seoul's potential negotiation strategies before initiating comprehensive tariff negotiations with the U.S. The hearing was conducted as part of the necessary procedures for signing a trade agreement under the Act on the Conclusion Procedure and Implementation of Commercial Treaties, as stated by the Ministry of Trade, Industry and Energy.
Yang Joo-young, director of the office of economic security and trade strategy research at the Korea Institute for Industrial Economics and Trade, emphasized that the U.S. administration's significant tariff measures could cause structural damage to Korean industries, leading to a decline in exports. She noted that the U.S. accounts for over 18 percent of South Korea's exports, affecting key manufacturing industries such as automobiles, semiconductors, batteries, and machine equipment, which rely heavily on access to the U.S. market.
According to a feasibility study by the Korea Institute for International Economic Policy (KIEP), South Korea's gross domestic product could decrease by 0.3 to 0.4 percent if U.S. tariff measures, including those yet to be implemented, are fully enforced. The Trump administration has already imposed 50 percent duties on all steel imports and 25 percent tariffs on imported cars, with plans to levy substantial tariffs on semiconductor and pharmaceutical imports in the near future.
Kim Young-gui, a senior research fellow at KIEP, suggested that if Seoul manages to secure a deal with Washington, similar to those made by Britain and China, it could potentially mitigate some of the anticipated losses in exports. Additionally, officials from the agriculture and livestock industries have expressed concerns over Washington's push for Seoul to lift agriculture-related regulations, such as the import ban on American beef from cattle aged 30 months or older.
Suh Jin-kyo, president of GS and J Institute, highlighted the sensitivity of the cattle age issue in Korea, warning that discussions on the matter could lead to political and social controversy. He also noted that removing the cattle age restriction might negatively impact Korean consumer perceptions of U.S. beef, potentially reducing its exports to Korea.
In response, Chang Sung-gil, director-general for trade policy at the industry ministry, pointed out that the U.S. had a $66 billion trade deficit in goods with Korea last year, although it continues to enjoy annual surpluses in the service and agricultural sectors. He added that the U.S. benefits from preferential treatment in the Korean market for agricultural and livestock products under the bilateral free trade agreement.
The Seoul government has been engaged in trade consultations with the Trump administration over the past few months, aiming to finalize a package deal by July 8, when the 90-day pause on U.S. reciprocal tariffs will end. Recent technical discussions in Washington involved high-level meetings between South Korea's Trade Minister Yeo Han-koo and U.S. counterparts, including Trade Representative Jamieson Greer.
South Korea is seeking full exemption from or reduction of the Trump administration's 25 percent duties, which consist of a 15 percent reciprocal tariff and a 10 percent baseline tariff, as well as sectoral tariffs on steel, automobiles, and other imports. The two sides have explored measures to address Korea's trade surplus with the U.S. and Washington's claims of South Korea's non-tariff measures.
An industry ministry official indicated that while the U.S. previously maintained that only the 15 percent reciprocal tariffs were negotiable, the latest meetings suggested Washington might consider negotiating sectoral tariffs if Seoul offers substantial commitments. The Korean delegation emphasized Seoul's potential role as a key partner in America's manufacturing renaissance plan.
The government intends to integrate feedback from the public hearing into its negotiation strategy and report to the National Assembly before launching full-fledged trade negotiations with the U.S.