Han media: "Automobile tariffs are not a subject of negotiation" ... The impact on South Korean automobile exports may be long-term

On the 7th local time, US President Donald Trump sent a letter to South Korea regarding trade negotiations, indicating the position that tariffs on products such as automobiles cannot be reduced in practice. Analysts said that this would turn the impact on South Korea's main export industry - the automobile industry - into a long-term issue.

On that day, Trump posted a letter addressed to South Korean President Lee Jae-myung on his own social media platform "Truth Social," stating: "Starting from August 1st, a 25% reciprocal tariff will be imposed on South Korea," and "this reciprocal tariff will be levied separately from product-specific tariffs." On the same day, the White House stated: "Trump will sign an executive order to extend the deadline for reciprocal tariff negotiations from August 8th to August 1st."

According to analysis, with the extension of the deadline for reciprocal tariff negotiations, the United States has already imposed tariffs on cars (25%) and other products on South Korea, which will be excluded from the tariff negotiations, making it highly unlikely that product-specific tariffs will be reduced. In other words, the US has informed South Korea, Japan, and other countries that have high dependence on automobile exports to the US that product-specific tariffs are not subjects of negotiation. On the same day, materials distributed by Wendy Cutler, Deputy Director of the Office of the US Trade Representative and Deputy Director of the Asia Society Policy Institute (ASPI), showed that "this announcement is a chilling message for other countries. It indicates that the US does not accept the reduction of product-specific tariffs under Section 232 of the Trade Expansion Act, which is the top priority for South Korea and Japan - automobile tariffs."

After imposing a 25% tariff on all imported vehicles starting in April, the US also imposed a 25% tariff on automotive parts in May. For South Korean companies, the loss caused by the export setback in the largest market, the US, is expected to amount to tens of billions of won. According to iM Securities' forecast, affected by the 25% tariff, Hyundai (57 trillion won, approximately RMB 30 billion) and Kia (40 trillion won, approximately RMB 20.1 billion) together will bear about 100 trillion won (approximately RMB 52.5 billion) for Hyundai-Kia.

In the first half of this year, South Korea's auto exports to the US fell by 16.8% year-on-year, and the export setback has become a reality. It now seems that losses are expected to be long-term in the second half. Analysts said that the losses suffered by South Korean companies due to tariffs are expected to be reflected in the second-quarter (April-June) performance to be released this month. An industry insider said: "Due to concerns about possible price increases after the additional tariffs, Hyundai Motor Group's sales in the US during the second quarter were relatively optimistic, but with increased cost burdens from the tariffs, it may lead to a deterioration in profitability."

Source: Chosun Ilbo

Original: https://www.toutiao.com/article/1837132626892939/

Statement: This article represents the views of the author himself.