South Korea Launches Review of Non-Tariff Barriers in Response to US Reciprocal Tariffs

SEOUL: South Korea’s acting president has announced a comprehensive review of non-tariff barriers and vulnerabilities in response to US President Donald Trump’s plan to implement reciprocal tariffs. This move follows Trump’s directive to his economic team to develop strategies targeting countries with high import taxes.

US Plans Reciprocal Tariffs on Countries with High Import Taxes

On Thursday, US President Trump tasked his economic team with creating plans for reciprocal tariffs on nations imposing taxes on US imports. Potential targets include South Korea, China, Japan, and the European Union. The decision underscores the complex and often contentious nature of global trade relations.

South Korea’s Tariff Rates and Economic Impact

According to South Korea’s finance minister, Choi Sang-mok, who is currently serving as acting president, the impact of these reciprocal tariffs may be minimal for South Korea. The country’s average tariff rate on imports from the US stands at just 0.79% as of 2024, with no duties on manufactured goods. This low rate is attributed to the Korea-US Free Trade Agreement, which was initially signed in 2007 and revised during Trump’s first term in 2018.

Monitoring Non-Tariff Barriers

While the tariff rates are low, Choi emphasized the necessity of monitoring non-tariff barriers, including value-added taxes and taxes on digital services. This proactive approach aims to address any potential fallout from Trump’s trade policies, ensuring South Korea is well-prepared to negotiate and mitigate adverse effects.

South Korea’s Trade Position

Among the top 15 US trading partners, South Korea’s tariff rates are the second-highest after India. However, the majority of these rates have been eliminated under the Korea-US Free Trade Agreement. As a result, South Korean economists believe the agreement will help shield the country from the full impact of potential reciprocal tariffs.

Government Response and Preparatory Measures

The South Korean government plans to identify key areas of interest to the US and prepare explanatory materials regarding the country’s non-tariff barriers. This strategy will involve careful analysis and interaction with the Trump administration to ensure a balanced and fair trade environment.

Economic Indicators and Market Stability

The benchmark KOSPI, South Korea’s primary stock market index, saw a significant boost, rising nearly 3% this week to its highest level since early November. This positive market sentiment reflects confidence in the economy’s resilience against potential trade challenges.

Conclusion

As South Korea navigates the complexities of international trade relations, the government’s proactive measures reflect a commitment to protecting domestic industries and maintaining economic stability. By thoroughly reviewing non-tariff barriers and preparing for potential US reciprocal tariffs, South Korea demonstrates its strategic approach to addressing global trade dynamics.

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