Tariffs shock: South Korea braces for economic impact
The acting president of South Korea, Han Duck Soo, has directed the government to prepare comprehensive actions in response to the 25% tariffs on imports from Korea announced by Donald Trump. Experts predict serious consequences for the South Korean economy, as it is largely driven by exports.
Han Duck Soo, serving as South Korea's acting president, ordered the development of a strategic response to the U.S.'s announced tariff increases on Thursday. This decision followed U.S. President Donald Trump's announcement of higher tariffs for all trading partners, which includes 25% tariffs on goods from South Korea, scheduled to take effect next Wednesday.
During his address, Han stressed the seriousness of the situation, stating, "The circumstances are very serious, with a real threat of a global trade war looming. Therefore, the government must use all available means to overcome this trade crisis." The acting president called an extraordinary meeting of the task force on economic strategy and security, attended by key cabinet members, including Finance Minister Choi Sang Mok and Industry Minister Ahn Duk Geun.
Han pledged that the government would conduct a detailed analysis of the new tariffs' impact on the South Korean economy. He also called for close cooperation with businesses and active negotiations with the United States. The primary goal of these efforts, according to the Yonhap agency, is to minimize potential damage to the country.
Support for vulnerable economic sectors
Acting President Han instructed his cabinet to swiftly develop emergency support measures for companies and sectors most affected by the U.S. tariffs. Particular attention was given to the automotive industry, a key branch of South Korean exports. Later that day, Han was scheduled to chair a meeting with private sector representatives to discuss possible countermeasures.
In his Wednesday speech, Donald Trump mentioned both South Korea and Japan—Washington's allies in Asia—accusing these countries of engaging in unfair trade practices against the United States. This decision to increase tariffs came despite previous efforts by Seoul authorities to secure exemptions. South Korean diplomats contended that their country has almost zero tariffs under the existing comprehensive free trade agreement with the USA.
Serious threat to an export-dependent economy
Exports account for nearly half of South Korea's gross domestic product. Analysts in Seoul estimate that Trump's decisions on Wednesday will have much more severe consequences than initially anticipated, according to the Reuters agency.
Park Sang Hyun, an economist at iM Securities, stated that "for the domestic economy, a significant blow will be inevitable." He emphasized that key export products, such as cars, will be heavily impacted by the new tariffs. He also highlighted an additional issue: "It is clear that major export products such as automobiles will be hit hard, and exports to the US through production bases in Vietnam will also be hit hard."
The Trump administration's decision could have far-reaching consequences for the South Korean economy, which is already grappling with numerous international challenges. The introduction of 25% tariffs poses a significant threat to the competitiveness of Korean products in the U.S. market, potentially leading to a decline in exports and a slowdown in economic growth.
