Rewritten Article:
South Korea's Approach to Tariffs: Handling Impositions as a Key Trade Partner and Exporter
Host MICHEL MARTIN dives into trade negotiations between Japan, South Korea, and the US, focusing on the impact of tariffs on South Korea - an Asian ally and powerhouse exporter.
(SOUNDBITE OF MACHINERY WHIRRING)
NPR's Anthony Kuhn reports from Seoul on how South Korean businesses are coping with 25% tariffs imposed by the Trump administration. At GJ Aluminum company in Hwaseong city, just south of Seoul, a machine slices rolled aluminum sheets into two-inch strips for use in air conditioners, electric transformers, and other equipment.
GJ's CEO, Yoo Kyung-yeon, laments that the Trump tariffs struck when the company was about to invest in a new factory to produce aluminum for the US market, only for their clients to halt the deal due to the increased costs. Yoo explains that the tariffs make GJ's products less competitive in the market.
South Korea's government has pledged more than $254 billion in aid to help exporters like GJ, including assistance in diversifying away from the US market.
Politician and former Samsung executive Yang Hyang-ja expresses concern about the unpredictability of the Trump administration's policies, fearing that it could cause companies to suffer or face unexpected difficulties. Yang states that South Korean companies are willing to invest in the US if the business environment is favorable but worry about the inconsistency and sudden change in policies.
Under the Biden administration's friendshoring policy, South Korean companies invested billions of dollars in the US, primarily in states like Alabama, Texas, and Georgia, to make semiconductors and electric vehicles, industries where the US competes with China. However, President Trump wants to cancel the subsidies as South Korean firms ramp up production.
Senior fellow at the nonpartisan Peterson Institute for International Economics and former South Korean trade minister Yeo Han-koo cautions that despite South Korea's advanced technologies, its economy is significantly smaller than the US' and relies on its alliance with the US for security.
Yeo notes that instead of protesting the new policies, South Korean companies must focus on adapting to them. Lee Seungjoo, a professor at Chung-Ang University in Seoul, agrees, stating that the bigger goal of the Trump administration is to contain China and South Korea is one of the essential countries in achieving this goal.
South Korean officials aim to reach a deal with Washington before US tariffs kick back in July.
Insights:
- Diversification: South Korean companies can explore other markets where tariffs are lower or nonexistent to reduce dependence on the U.S. market.
- Supply Chain Adjustments: Companies may restructure their supply chains by relocating production to countries with preferential trade agreements with the U.S. or setting up facilities within the U.S.
- Price Adjustments: Companies can adjust the prices of their products exported to the U.S. to maintain competitiveness.
- Lobbying and Trade Negotiations: Engaging in diplomatic efforts to negotiate tariff reductions or exemptions can be beneficial.
- Investment in Compliance: Companies must ensure they comply with U.S. regulations and standards to avoid additional barriers beyond tariffs.
Regarding the Biden administration's policies, the approach tends to focus more on multilateral trade agreements, diplomatic negotiations, and strategic partnerships rather than broad tariff imposition. If the Biden administration were to implement trade policies favorable to South Korea, they might involve efforts to reduce or eliminate tariffs through trade agreements, economic cooperation, and strategic partnerships, which could benefit South Korean companies.
- The South Korean government has promised more than $254 billion in aid to help exporters like GJ, including assistance in diversifying away from the US market in response to the tariffs imposed by the Trump administration.
- In the face of unpredictable policies from the Trump administration, politicians like Yang Hyang-ja have expressed concern that the inconsistency and sudden changes in policies could cause companies to suffer or face unexpected difficulties.
- South Korean companies are willing to invest in the US if the business environment is favorable, but they worry about the inconsistency and sudden changes in policies, as stated by Yang.
- The Biden administration's friendshoring policy has led South Korean companies to invest billions of dollars in the US, primarily in states like Alabama, Texas, and Georgia, to make semiconductors and electric vehicles.
- Senior fellow Yeo Han-koo advises that despite South Korea's advanced technologies, its economy is significantly smaller than the US' and relies on its alliance with the US for security, emphasizing the need for adaptation to new policies.
- South Korean officials aim to reach a deal with Washington before US tariffs kick back in July, understanding the impact of tariffs on South Korea as an Asia ally and powerhouse exporter.
