Trump's tariff shockwaves: Korea braces for economic impact

Han Duck Soo, acting as the president of South Korea, on Thursday ordered the development of a comprehensive strategy in response to the announced tariff increases by the U.S. The decision was made shortly after U.S. President Donald Trump announced higher tariffs for all trading partners, including 25% tariffs on goods from South Korea, which are set to take effect from next Wednesday.

During his address, Han emphasized the gravity of the situation, stating that "This is a very serious situation where a global tariff war has become a reality. The government must pour all of its capabilities into overcoming the trade crisis." The acting president convened an extraordinary meeting of the task force on economic strategy and security, attended by key cabinet members, including Finance Minister Choi Sang Mok and Industry Minister Ahn Duk Geun.

Han committed the government to conduct a detailed analysis of the impact of the new tariffs on the South Korean economy. He also called for close cooperation with enterprises and active negotiations with the United States. The main goal of these efforts is to minimize potential damage to the country, Yonhap agency reports.

The acting president Han instructed his cabinet to quickly develop emergency support measures for companies and sectors most affected by the U.S. tariffs. Particular attention was given to the automotive industry, which is one of the key branches of South Korean exports. Later that same day, Han was scheduled to chair a meeting with private sector representatives to discuss possible countermeasures.

In his Wednesday speech, Donald Trump mentioned both South Korea and Japan – Washington's allies in Asia's security – accusing both countries of engaging in unfair trade practices against the United States. The decision to increase tariffs was made despite previous efforts by the Seoul authorities to obtain exemptions. South Korean diplomats argued that their country has almost zero tariffs under the existing comprehensive free trade agreement with the U.S.

Exports account for nearly half of South Korea's gross domestic product. Analysts in Seoul estimate that Trump's Wednesday decisions will have much more severe consequences than initially anticipated, Reuters agency reports.

Park Sang Hyun, an economist at iM Securities, stated that "for the domestic economy, a significant blow will be inevitable." The expert emphasized that key export products, such as cars, will be heavily impacted by the new tariffs. He also pointed out an additional issue: "It is clear that major export products such as automobiles will be hit hard, and exports to the US through production bases in Vietnam will also be hit hard."

The Trump administration’s decision may have far-reaching consequences for the South Korean economy, which is already grappling with numerous challenges on the international stage. The introduction of 25% tariffs poses a significant threat to the competitiveness of Korean products in the U.S. market, potentially leading to a decline in exports and a slowdown in economic growth.