It is expected that the US exports to China, Canada, and Mexico will decrease. It is expected that industries such as automobiles and steel will also be adversely affected. The White House announced on the same day that it would impose tariffs on China, Canada, and Mexico.
He said the tariffs would go into effect as scheduled on February 1. He did not mention any specific plans or dates, but he declared that the United States would impose tariffs not only on China but also on its allies, including Mexico and Canada.
Canada is also teasing a response with "retaliatory tariffs." With the tariff front expanding in North America and a global tariff war expected to escalate, it is expected that the international trade order will also undergo changes.
In particular, most experts believe that South Korea, which is highly dependent on exports, will be directly or indirectly affected.
According to a report released by the Korea Institute for International Economic Policy in October 2024, the United States will expand trade with Korea, with which it has a bilateral free trade agreement (FTA), to 10 countries in 2024, creating tension between the South Korean government and export companies.
In a worst-case scenario in which tariffs are first imposed and major countries retaliate, the report predicts that GDP could fall by 0.29% to 0.69%.
In particular, South Korea's exports are expected to fall by up to $44.8 billion. Last year's total exports were $6,322 million.
The US has also been pushing back against the US tariff hike, which has been expected to have a negative impact on South Korea's export market.
"Korea will benefit from the imposition of tariffs on Canada, Mexico and China," said Chang Sang-sik, director of the Korea International Trade Association's International Trade and Commerce Institute.
"It is expected that the auto, home appliance and steel industries that have expanded into Mexico to manufacture products and sell them in the U.S. will once again find themselves in a difficult position," he said.
"If the (US) tariff hikes come sooner than we expect, it will have a major impact on the export industry," said Jeong Gyu-cheol, head of the KDI's economic outlook office.
"The negative impact is expected to worsen," he said, adding, "If this happens, there is still a chance that we will not be able to achieve this year's projected growth rate."
Korean companies operating in Canada and Mexico will also be affected. In particular, Mexico has a large number of electronic and automated equipment manufacturers that are trying to enter the U.S. market.
According to the Ministry of Trade, Industry and Energy, as of the first half of 2024, a total of 525 Korean companies have invested in Mexico, of which 30
Among them are large companies such as Samsung Electronics, Kia Motors, and POSCO. These companies export products made in Mexico to South America and Europe.
"We are considering options such as either withdrawing from the market or moving our factories to the U.S.," said a source at the Ministry of Trade, Industry and Energy. "We are considering options such as either withdrawing from the market or moving our factories to the U.S., which are impacting the roughly 500 Korean companies that have expanded into Mexico, including those in the automobile, home appliance and steel industries."
"We will make thorough preparations to minimize the impact of these disputes," he said, adding, "We also have many other areas of cooperation, such as Alaska development and the energy and shipbuilding sectors, so we will explore new opportunities."
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2025/02/02 07:05 KST
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