U.S. President Donald Trump mentioned the possibility of renegotiation or cancellation of the KORUS FTA during his interview with Reuters on April 27.
According to the Korea Economic Research Institute, such a measure is estimated to result in South Korea’s export loss of US$6.6 billion to US$17 billion for five years to come.
The latter value is based on an assumption that new and higher tariff rates are adopted in the sectors where the trade deficit of the United States has rapidly increased since the implementation of the free trade deal between the United States and South Korea. In this case, the losses are estimated at US$10.1 billion, US$5.5 billion and US$1.4 billion on the part of South Korea’s automobile, machinery and steel industries, respectively. In addition, a total of 154,000 South Koreans are likely to lose their jobs in this case, including 90,000 in the automobile industry.
The former value, which assumes tariff adjustment to the pre-KORUS FTA level, includes US$2.2 billion in automobile, US$1.65 billion in machinery, US$760 million in petrochemical and US$720 million in steel. In this case, 54,000 jobs are likely to disappear, including 20,000 in the automobile industry.