Korean car and automotive industry let out sigh of relief amid reports that U.S. President Donald Trump this week may announce postponement in triggering sweeping 25-percent tariffs on auto imports to the United States.
Kim Yong-rae, Korea’s deputy minister for trade, on Thursday said the government was holding breath until Trump makes a formal announcement before the May 18 deadline for a sweeping tariff hike on finished cars and parts after revising a report from the Commerce Department that can slap maximum 25 percent tariff on foreign goods upon finding grounds for their threat to national security.
An unnamed official from the Ministry of Trade, Industry and Energy also added that foreign news reports of a possible exemption of Korea from the penalties is a good signal but it should watch over the situation until the weekend when a final decision will be made.
Comments come after Bloomberg reported that “officials firmed up the decision to delay tariffs for up to 180 days,” at a White House meeting on Tuesday, citing two people familiar with the deliberations. The delay is “to avoid blowing up negotiations with the EU and Japan and further antagonizing allies as he ramps up his trade war with China,” it said.
The delay is a huge relief for the Korean car makers whose exports to the U.S. currently enjoy near-tariff-free rate of 0.25 percent, whereas Japanese and European cars are levied with 2.5 percent. Korean pickup trucks and vans are shipped at 25 percent tariff under the revised FTA agreement.
The Trump administration has been pushing to raise the tariff to 25 percent on imported autos under Section 232 of the U.S. Trade Expansion Act.
The positive news lifted up car and automobile part stocks despite the main index fall of 1.2 percent. The tire category topped gainers by jumping 1.9 percent. The auto sector also added 0.1 percent led by Kia Motors which gained 0.95 percent. Hyundai Motor Co. lost 0.39 percent to 127,500 won ($107).
Fearing devastating blow to the local industry, the Korean government has been going all-out jointly with the private sector to urge the Trump administration to exclude Korea since the Commerce Department submitted its Section 232 national security report to the White House on February 17. It met with U.S. government and Congress officials and put out utmost efforts to ask for exemption.
Yoo Myung-hee, Korea’s trade minister, also visited Washington this week and met with Commerce Secretary Wilbur Ross and White House economic adviser Larry Kudlow. Kim Young-ju, chairman of Korea International Trade Association, also visited the U.S. with a group of private delegation from 16 companies including Posco, Seah Steel, and Hyundai Motor, and met with U.S. officials.
Officials from the National Assembly and the Federation of the Korean Industries and other groups also went on an outreach to the U.S. to request for exemption.
Private delegation groups have consistently emphasized the fact that the issue of bilateral trade imbalance has been considerably resolved, particularly that involving autos, as the U.S.-Korea free trade agreement was revised after the launch of the Trump administration.
By Lim Sung-hyun and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]