An analysis showed that if universal tariffs are imposed on major importing partners as promised during the presidential election after Donald Trump’s second U.S. administration takes office, Korea’s exports to the U.S. will decline by up to 13.1%. As a result, the decrease in nominal gross domestic product (GDP) added value of the Korean economy is expected to reach up to 10.6 trillion won.
On the 26th, the Korea Institute for Industrial Economics and Trade announced this in a report titled ‘Analysis of the Effects of Trump’s Universal Tariff: Focusing on the Effects of Exports to the United States and Added Value.’ A universal tariff is a policy in which the United States imposes a certain level of tariff on all imported goods. The report estimated the effect of reducing Korea’s exports to the United States by assuming four scenarios in which universal tariffs could be imposed on major countries, as U.S. President-elect Trump mentioned during the presidential election.
As a result of the analysis, the reduction in Korea’s exports to the United States due to the imposition of universal tariffs by the United States was expected to range from a minimum of 9.3% to a maximum of 13.1%. If the United States imposes a 60% tariff on China and a 10% tariff on the rest of the world, the effect of reducing Korea’s exports to the US is estimated to be 9.3%.
If the United States imposes a 10% tariff on Mexico and Canada, which are signatories to the United States-Mexico-Canada Agreement (USMCA), a 60% tariff on China, and a 20% tariff on other countries, including Korea, our exports to the US would decrease by 13.1%. It is expected to be done.
In particular, the automobile and semiconductor sectors, which are major export items for Korea, are expected to be hit hard. The Korea Institute for Industrial Economics and Trade predicted that automobile exports to the United States would decline by up to 13.6% and semiconductor exports by up to 8.3% due to the imposition of universal tariffs by the United States.
It is estimated that the nominal added value of the Korean economy will decrease from 0.34% (7.9 trillion won) to 0.46% (10.6 trillion won) due to the decline in exports to the United States. The report explained, “We did not take into account the investment outflow effect of the imposition of universal tariffs, such as relocation of a company’s production base, but taking this into account, the effect of reducing added value is expected to be greater.”
As there is a growing possibility that the second Trump administration will strengthen its protectionist stance, it was also pointed out that a diplomatic response plan is needed in managing investment and trade balance. The Korea Institute for Industrial Economics & Trade said, “Even during the first Trump administration, Korea was persuaded to exclude the 25% tariff on automobiles,” and added, “As a country that signed an FTA with the U.S., a diplomatic response is urgently needed so that it can be designated as a country exempt from the imposition of universal tariffs or a country with differential imposition.” “He emphasized.
Sejong = Reporter Soon-gu Jeong [email protected]
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