South Korea is making a last-ditch try and win an exemption from US tariffs on vehicles and auto elements, because the nation struggles to protect its export-driven financial system from rising US protectionism and the fallout from Donald Trump’s commerce conflict with China.
Yoo Myung-hee, South Korea’s commerce minister, will go to Washington this week to press Seoul’s case with White Home officers, members of Congress and US commerce representatives, earlier than the US president pushes by a brand new tariff towards considered one of its key allies in Asia.
Mr Trump is predicted to decide by Saturday on whether or not to slap duties of as much as 25 per cent on automobile imports and elements beneath the so-called “Part 232” tariffs, used to guard the US from strategic threats from its buying and selling companions.
The US is South Korea’s second-largest buying and selling accomplice after China and autos are South Korea’s high export merchandise to the US, price $13.6bn final 12 months. The Part 232 plan has raised fears in Seoul of huge job losses, with carmakers anticipated to reply by shifting some manufacturing offshore.
“The US is shifting ahead with the America-first coverage, with the Washington-Beijing commerce dispute including uncertainty,” Ms Yoo stated in Seoul earlier than her departure.
Regardless of Washington and Seoul being longstanding army and political allies — round 28,500 US troops are based mostly in South Korea to help defence towards North Korea — specialists doubted Asia’s fourth-largest financial system would keep away from the pending tariff.
“We’re fairly powerless to struggle and even resist the US on no matter they need on commerce,” stated an funding analyst in Seoul. “Not as a result of we’re depending on them economically, however as a result of politically we’re so depending on them.”
South Korean commerce officers famous that they final 12 months revised the nation’s commerce cope with Washington, permitting US carmakers to double their exports to South Korea whereas the US prolonged tariffs imposed on South Korean pick-up vehicles by 20 years to 2041.
“We predict it’s inappropriate for the US to make use of Part 232 towards us since we’ve already addressed US considerations,” stated Kim Jang-hee, an official at Seoul’s commerce ministry.
South Korea stays the one nation to implement a revised bilateral commerce cope with the Trump administration. However even convincing the US to comply with a softer tariff rise could be tough, after the US on Friday greater than doubled tariffs on $200bn price of Chinese language imports, specialists stated.
“Though the US protectionist transfer will not be immediately aimed toward us, it’s unlikely that we are able to get a full exemption,” stated Kim Pil-soo, a professor at Daelim College.
Mr Kim warned that “even partial tariffs can be devastating for the native automobile business already grappling with flagging gross sales abroad”.
Hyundai Motor, the nation’s largest carmaker and second-biggest firm, declined to remark.
Ms Yoo’s journey to Washington comes towards the backdrop of a slowing South Korean financial system. Within the first quarter, the nation noticed its worst quarterly GDP contraction because the world monetary disaster amid declining exports as corporations felt the pinch from world commerce pressure and weakening progress in China. Moody’s stated the potential tariffs would drag down South Korea’s financial progress this 12 months by an additional zero.three proportion factors.
The financial downturn and worries about Washington’s more and more protectionist stance have spurred officers in Seoul to rethink becoming a member of the Complete and Progressive Settlement for Trans-Pacific Partnership buying and selling bloc — devised initially as a part of the US “pivot to Asia” however from which the US withdrew after Donald Trump got here to energy. Seoul had beforehand prioritised bilateral commerce offers.
“We’re trying on the CPTPP as a chance for our financial system, given the worsening protectionism worldwide, as it’s the solely new commerce deal being mentioned globally,” stated Lee Dae-jung, a finance ministry official.