South Korean exports could drop between $5.3 billion and $44.8 billion if Trump implements his tariff policies and trading partners respond with equivalent measures against the United States. (Image courtesy of Wikimedia Commons)
SEOUL, Nov. 2 (Korea Bizwire) – A South Korean government research institute has warned that if Donald Trump returns to the presidency and implements his proposed tariff policies, South Korea could see its exports decline by as much as $44.8 billion (61.7 trillion won).
According to a report released on October 31 by the Korea Institute for International Economic Policy (KIEP), titled “Economic Impact of U.S. Trade Policy,” South Korean exports could drop between $5.3 billion and $44.8 billion if Trump implements his tariff policies and trading partners respond with equivalent measures against the United States.
The analysis examined various scenarios, including the potential implementation of additional universal tariffs of 10-20 percentage points on both countries with and without free trade agreements (FTAs) with the United States, as well as a scenario where China faces an additional 25 percentage point tariff.
The most severe impact would occur under a scenario where the U.S. imposes an additional 20 percentage point universal tariff on both FTA and non-FTA countries, while simultaneously applying a 60% tariff on China. This scenario would result in the maximum projected export decline of $44.8 billion.
This photo shows containers at a port in South Korea’s southeastern city of Busan on Oct. 14, 2024. (Image courtesy of Yonhap)
The study found that South Korea would face a double hit: a direct reduction in exports to the United States due to tariffs imposed on South Korea as an FTA partner, and an indirect decrease in intermediate goods exports to other countries.
The report emphasized the need to closely monitor the possibility of additional U.S. tariff measures being extended to FTA partners, including South Korea. It also recommended that both countries work to reinforce their mutual understanding of the reciprocal benefits provided by the Korea-U.S. Free Trade Agreement.
M. H. Lee (mhlee@koreabizwire.com)
