41% of Korea's US exports feared being subject to 'tariff bombs'

Amid the onslaught of 'tariff bombs' from the second administration of U.S. President Donald Trump, South Korea's economic dependence on the U.S. has increased significantly compared to the first administration. A report found that the items subject to a tariff hike announced by Trump so far are all major Korean exports, and together, they already account for nearly half of the country's exports to the U.S. Analysts say that South Korea, a U.S. ally, is bearing the brunt of the US tariff bomb.

According to the Korea International Trade Association on Wednesday, South Korea's annual exports of semiconductors, automobiles, steel, aluminum, and pharmaceuticals, which Trump announced his tariffs, were worth 52.9164 billion U.S. dollars last year. These five items thus accounted for 40.9 percent of Korea's total exports to the U.S. last year, which totaled 127.847 billion dollars.

The five items on which President Trump has already decided or threatened to impose additional tariffs are all flagship Korean exports. In the case of automobiles, where Hyundai-Kia shipped 1.01 million units to the U.S. market last year, 49 percent of all Korean companies' overseas exports went to the U.S. last year. Semiconductors such as high-bandwidth memory (HBM) exceeded 10 billion dollars in exports to the U.S. last year. Bio product exports to the U.S. are also on the rise, with Samsung Biologics signing a major contract worth 1 billion dollars with a U.S. company in July last year.

Trump's tariff bombshell is particularly worrisome because these are South Korea's main industries, and the South Korean economy's dependence on the US has increased significantly in recent years. Exports to the U.S. nearly doubled from 68.6 billion dollars in 2017, the first year of Trump's first administration, to 127.7 billion dollars last year. The portion of South Korea's exports to the U.S. out of its total overseas shipments also jumped from 12.0 percent in 2017 to 18.7 percent last year, as South Korean companies moved operations to North America and expanded exports to the region to avoid the U.S.-China conflict, only to be bombarded with the ‘tariff bomb’ in their main industries this time.

Analysts say this increased dependence on the U.S. and the sweeping U.S. tariff hikes have made it much harder for Korean companies to cope with Trump's second administration than it was during the first. “If additional tariffs become a reality, the cost competitiveness of Korean companies will decline significantly,” said an official from a Korean conglomerate with operations in North America. ”Even if we immediately review the feasibility and decide to build a factory in the U.S., it could take four to five years, so we are worried about the tariff burden in the meantime.”


한재희기자 hee@donga.com