Seoul: U.S. President Donald Trump's sweeping tariff measures are anticipated to significantly impact South Korea's economy by undermining exports and destabilizing Korean businesses, according to trade experts. They are urging the Seoul government to proactively engage in negotiations with Washington to mitigate these potential effects.
According to Yonhap News Agency, the concerns were raised during a public hearing aimed at gathering public opinions on Seoul's potential negotiation strategy ahead of the country's planned tariff negotiations with the U.S. The hearing was conducted in line with the procedures required 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 economic security and trade strategy research at the Korea Institute for Industrial Economics and Trade, highlighted the potential structural damage to Korean industries due to the U.S. administration's hefty tariff measures. She emphasized that these measures could lead to a decline in exports since the U.S. market accounts for over 18 percent of South Korea's exports. Yang also stressed the importance of maintaining access to the U.S. market, which she believes is crucial for Korea's position in the global technology war and supply chain restructuring.
A feasibility study by the Korea Institute for International Economic Policy (KIEP) suggests that South Korea's GDP may decrease by 0.3 to 0.4 percent if the U.S. tariff measures are fully implemented. The Trump administration has already imposed substantial duties on steel imports and imported cars, with plans to extend tariffs to semiconductors and pharmaceuticals.
Kim Young-gui, a senior research fellow at KIEP, noted that if South Korea can reach a deal with the U.S., similar to those by Britain and China, it could potentially recover some of the anticipated export losses. Additionally, officials from the agriculture and livestock sectors expressed concerns over the U.S.'s reported demands for lifting 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, warned that discussing the cattle age issue could lead to political and social controversy in Korea and might reinforce negative perceptions of U.S. beef among Korean consumers. This could potentially result in a decline in U.S. beef exports to Korea.
Chang Sung-gil, director-general for trade policy at the industry ministry, highlighted that the U.S. benefits from surpluses in service and agricultural sectors despite a trade deficit in goods with Korea. He emphasized that the U.S. has preferential access to the Korean market for agricultural products under the bilateral free trade agreement.
The Seoul government has been engaged in trade consultations with the Trump administration, aiming to finalize a package deal by July 8, when the 90-day pause on U.S. reciprocal tariffs will conclude. South Korea is seeking exemptions or reductions in these tariffs, along with those on steel, automobiles, and other imports. Vice Trade Minister Park Jong-won stated that Seoul will prioritize national interest in its negotiations.
The government plans to incorporate the feedback from the public hearing into its negotiation strategy, which will be reported to the National Assembly before the full-fledged trade negotiations commence with the U.S.