U.S. President Donald Trump and Chinese President Xi Jinping agreed on Dec. 1 to temporarily stop their trade war for 90 days.
Earlier, the U.S. president said that tariffs on Chinese products worth US$200 billion in total would be raised from 10% to 25% from Jan. 1, 2019. China, which imposed retaliatory tariffs on U.S. products worth US$110 billion, was planning to respond without delay.
The upcoming truce between the two superpowers is likely to alleviate concerns over international trade contraction. Also, it can be a boon for the South Korean economy, which revolves around exports.
Previously, the Hyundai Research Institute predicted that 25% U.S. tariffs on Chinese goods worth US$50 billion, which is equivalent to 10% of the United States’ total imports from China, would result in a 10% decrease in the United States’ total imports from China and a decrease of US$28.26 billion in South Korea’s exports to China. This amount is equivalent to 19.9% and 4.9% of South Korea’s exports to China and its total exports for last year, respectively.
At present, the trade war is affecting South Korea’s electrical equipment, IT and petrochemical exports to China in particular. South Korea posted a year-on-year export growth of 4.5% in November this year whereas the rate had been 22.7% in the previous month.