U.S. President Donald Trump throws pens used to signal government orders to the gang throughout an indoor presidential inauguration parade occasion in Washington, Jan. 20. AP-Yonhap
Korea’s exports are vulnerable to dropping momentum, as main trade-reliant producers face rising issues over the potential influence of U.S. President Donald Trump’s new tariffs on imported items from Mexico, together with further commerce pressures, consultants and trade officers mentioned Sunday.
On Saturday (native time), Trump unveiled a brand new tariff plan, imposing a 25 p.c tariff on items from Mexico and Canada and 10 p.c on these from China, citing issues over unlawful immigration and drug trafficking as the first causes for the transfer.
This transfer raises important issues for Korea at a vital time, as main Korean producers within the chip, automotive and metal industries depend on their Mexican manufacturing traces for exports to america.
Corporations like Samsung Electronics and LG Electronics function a number of equipment manufacturing amenities in Mexico, whereas Kia and POSCO have established factories there to chop labor prices for U.S. exports.
With the tariffs set to take impact on Tuesday, these corporations now face rising uncertainty relating to their U.S. earnings, because the tariffs will probably pressure them to allocate extra in investments to align with Trump’s protectionist insurance policies.
Specialists recommend that Korean corporations could haven’t any alternative however to construct extra manufacturing traces within the U.S. to mitigate the influence of the tariffs.
“There are not any clear breakthroughs apart from establishing extra factories there, as Trump continues to step up unfavorable rhetoric in opposition to any nations producing big commerce surpluses with the U.S.,” mentioned Kim Dae-jong, a professor of enterprise administration at Sejong College.
LG Electronics‘ manufacturing facility within the U.S. state of Tenessee / Courtesy of LG Electronics
In keeping with knowledge from the Ministry of Commerce, Business and Power, Korea’s commerce surplus with the U.S. reached a file excessive of $55.69 billion (81.2 trillion received) in 2024.
Kim additionally suggested the Korean authorities to think about growing imports of U.S. petrochemical merchandise as a gesture of commerce cooperation, even when it results in a lower within the commerce surplus.
“Trump is broadly anticipated to proceed growing stress on any nations reporting a excessive stage of commerce surplus with the U.S., so Korea must ship repeated gestures to extend imports from the U.S.,” the professional mentioned.
Different knowledge from the ministry additionally confirmed that Korea’s exports are vulnerable to dropping progress momentum. Exports right here in January fell by 10.3 p.c from a 12 months earlier. This marks the primary time since September 2023 that Korea’s month-to-month exports declined.
Different consultants additionally warned of extra tariffs, significantly for export objects producing big revenues within the U.S.
“Vehicles account for greater than half of Korea’s commerce surplus with the U.S., and likelihood is that Trump will impose countervailing duties of no less than 10 p.c to twenty p.c in opposition to nations with robust commerce surpluses with the U.S.,” mentioned Kim Pil-soo, an automotive expertise professor at Daelim College School.
This may deal a extreme blow to manufacturers like Genesis — owned by Hyundai Motor Group — as many of the Genesis lineup is assembled in Korea for export to the U.S. The U.S. accounted for 32.7 p.c of Genesis‘ complete gross sales final 12 months.
The automotive professional additionally urged the federal government and the Nationwide Meeting to work collectively in addressing the looming challenges posed by Trump.
“It’s realistically robust for corporations to diversify their export channels in a brief time frame, so the Korean authorities and the Meeting ought to cease their pointless tit-for-tat (exchanges) and take motion to answer Trump’s stress regardless of the continued management vacuum brought on by the impeachment of President Yoon Suk Yeol,” he mentioned.
Business officers additionally expressed issues in regards to the escalating tariff stress brought on by Trump’s insurance policies.
“When corporations are slapped with the elevated tariffs, they may find yourself dropping their value competitiveness and market share there,” an official from a conglomerate mentioned. “For now, corporations haven’t any alternative however to affix arms with the federal government to attenuate the potential repercussions beneath the Trump administration.”
In response, the federal government plans to intently monitor U.S. coverage traits and collaborate with trade leaders to evaluate potential measures and mitigate the influence on home exporters.
