Tariff shocks have caused a 4.4% decline in South Korea's exports to the US, while Japan saw a 2.3% increase

In the first half of this year, South Korea's exports to the United States decreased by about 400 billion won compared to the same period last year, while Japan increased its exports by more than 200 billion won. Among major competitors in the US market, only China had a larger decrease in export value than South Korea. This indicates that South Korea has suffered a more severe "tariff shock" than Japan, the EU, and Taiwan.

According to data from the US Department of Commerce on the 6th, the total value of goods imported from South Korea by the US in the first half of the year (January-June) was 64.5 billion USD, down 4.4% (3 billion USD, approximately 4.15 trillion won) from 67.5 billion USD in the same period last year.

The US trade deficit in goods with South Korea (export value - import value) also decreased from 34.1 billion USD in the first half of last year to 31.1 billion USD in the first half of this year, a reduction of 3 billion USD. This means that South Korea's trade surplus in goods with the US has correspondingly decreased.

In the first half of this year, among the main trading partners of the US, only China, South Korea, and Canada saw a reduction in both the value of goods imports and the goods trade deficit. The intense "tariff war" between the US and China led to a reduction of 30.9 billion USD in the US' imports from China (from 198.3 billion USD to 167.5 billion USD), and the goods trade deficit also decreased by 15.8 billion USD (from 127.3 billion USD to 111.5 billion USD).

Under the "tariff bomb" of the Trump administration, South Korea faced a more severe impact than its competitors such as Japan, the EU, and Taiwan. In fact, the total value of goods imported from Japan by the US (74.9 billion USD) increased by 2.3% (1.7 billion USD) compared to the previous year (73.2 billion USD).

South Korean companies compete fiercely with Japanese companies in the US market in areas such as automobiles, parts, batteries, semiconductors, machinery, and steel. However, as the tariff war unfolded, the gap in exports to the US between South Korea and Japan widened by another 4.7 billion USD within a year.

Although both South Korea and Japan saw significant declines in exports to the US for products subject to tariffs such as automobiles and parts (25%) and steel (50%), Japan saw increases in exports in other areas such as semiconductors, machinery, and chemical products. In contrast, although South Korea performed well in exports to the US in areas such as semiconductors and biomedicine, it failed to offset overall losses due to weakness in cars and general machinery.

The outlook is not optimistic either. The reciprocal tariffs (15%) imposed on South Korea and Japan and the tariffs on automobiles and parts (15%) are the same. However, regarding automobile and parts tariffs, Japan's tariff increased by 12.5 percentage points from the original 2.5%, while South Korea lost the duty-free advantage provided by the Korea-US Free Trade Agreement (FTA) (0% increased to 15%) due to this tariff agreement. KPMG recently pointed out in a report that "although the tariff rate has decreased, concerns about a decline in price competitiveness remain due to the cancellation of the FTA duty-free treatment."

Other major exporting economies such as Japan, Taiwan, the EU, and Vietnam performed well in the US market, unlike South Korea. The US trade deficit with Taiwan increased from 29.8 billion USD last year to 56.2 billion USD this year, nearly doubling. The trade deficit with the EU also increased by 37.1 billion USD compared to last year. The trade deficits with countries such as Vietnam (24.8 billion USD), Mexico (13.8 billion USD), and India (10.5 billion USD) also increased compared to last year.

Meanwhile, the US imports from various economies (i.e., their exports) also saw significant growth. Imports from Taiwan increased by 61.2%, from Vietnam by 42.6%, and from the EU by 18.3%.

Therefore, in the first half of this year, the US goods trade deficit expanded by 143.9 billion USD (from 549.2 billion USD to 693.1 billion USD) over the past year. This was because, although exports increased by 5.1% (52.8 billion USD), imports increased by more (12.4%, 196.7 billion USD).

The Trump administration is expected to start imposing 15% reciprocal tariffs on South Korea, Japan, and the EU on local time on the 7th. President Trump also announced plans to impose additional tariffs on products such as semiconductors and pharmaceuticals, and it is expected that future tariff policies will continue to cause chaos.

Park Sung-hun, a professor emeritus at the Graduate School of International Studies at Seoul National University, pointed out, "The Trump administration is celebrating a significant increase in US tariff revenue, but this is actually because companies increased imports before the implementation of tariffs to stock up on inventory. This does not solve the trade deficit issue, and if the reciprocal tariffs are implemented as planned, imports (and tariff revenue) will also inevitably decrease."

Source: JoongAng Daily

Original: www.toutiao.com/article/1839801611026503/

Statement: This article represents the views of the author.