The Korea Institute for International Economic Policy (KIEP) said on May 15 that the United States’ and China’s additional 25 percent tariffs are likely to result in a decline of US$1.36 billion in South Korea’s exports to the United States and China and that the value may increase depending on global economic conditions.
The estimate is based on the premise that the United States will raise its tariffs on 5,745 Chinese goods worth US$200 billion in total to 25 percent and China will get even by imposing 25 percent tariffs on U.S. products worth US$60 billion.
“South Korea’s exports to China are estimated to fall by approximately US$1.28 billion in the wake of the U.S. tariffs and South Korea’s exports to the United States are estimated to fall by US$78 million as a result of China’s retaliatory tariffs,” the institute explained, adding, “More tariffs can lead to steeper drops.”
The institute also said that it lowered its global economic growth forecast for this year from 3.5 percent to 3.2 percent. “The trade disputes between the United States and China, Japan and Europe are expanding along with Brexit-related uncertainties, signaling a slowdown of the eurozone economy,” said the institute, adding, “South Korea’s exports are likely to keep falling under the circumstances.”
It also mentioned that the U.S. government’s decision on tariffs on cars, which is scheduled to be made in three days, can be postponed by six months. “The president of the United States can postpone the decision by up to 180 days according to Section 232 of the Trade Expansion Act of 1962 although such postponement is without precedent,” it explained.