President Donald Trump pointed to South Korea as a country with more unfair tariffs against American products than China, while slamming the handing out of subsidies for foreign chipmakers like Samsung Electronics Co.
“China’s average tariff on our products is twice what we charge them, and South Korea’s average tariff is four times higher,” Trump said in a speech to a joint session of Congress. “Think of that, four times higher, and we give so much help militarily and in so many other ways to South Korea, but that’s what happens. This is happening by friend or foe.”
Trump’s comments are likely to be a cause for concern for policymakers and businesses in South Korea as an indication that the president will eventually turn his focus to trade and security relations with Seoul.
South Korea’s currency briefly weakened against the dollar to about 1,460 won after Trump mentioned Seoul’s tariffs, before paring losses and then strengthening to around 1,450 late afternoon. Samsung shares finished the day down 0.9 percent.
The president also mentioned Mexico, India and other nations with trade surpluses with the US that impose duties on American products. Still, his comments underscore the high level of unfairness he feels toward South Korea, a supplier of everything from automobiles to semiconductors to the US.
In a statement after Trump’s speech, South Korea said its effective tariff on US imports amounted to 0.79 percent last year due to a free trade deal that came into effect in 2012 between the two nations. Its tariffs would be four times higher only if a rate among World Trade Organisation members is applied, but that isn’t the case under the bilateral agreement, according to the statement.
Bloomberg Economics estimates that the mere threat of US tariffs could trim 0.8 percent from South Korea’s gross domestic product this year, with the impact concentrated in the second half.
South Korea may face other issues with Trump’s administration, too. Seoul relies on security guarantees from Washington to deter North Korean aggression. Trump last year referred to its ally as a “money machine” as he reiterated his demand that South Korea shoulder more of the upkeep for American troops stationed on the Korean Peninsula.
During his speech, Trump also blasted the Chips and Science Act introduced under the Biden administration, calling it a “horrible, horrible thing.”
The president didn’t mention Samsung, the South Korean builder of memory chips that is a major recipient of subsidies under the act for a plant it’s building in Texas. But his comments rekindle concerns that the program may be cancelled for foreign manufacturers setting up operations in the US.
“They will come because they won’t have to pay tariffs if they build in America,” he said. “You should get rid of the chip act, and whatever is left over, Mr. Speaker, you should use it to reduce debt or any other reason you want to.”
In other comments pertaining to South Korea, Trump said the ally is among nations that want to partner in a natural gas pipeline in Alaska. US officials have touted the promise of the project to Asian policymakers, including Japan’s prime minister and South Korea’s trade minister.
South Korean officials visited Washington last week, calling on its longtime ally to exempt Seoul from Trump’s planned tariffs. South Korea relies heavily on trade for economic growth, with its largest companies generating the bulk of their revenues overseas.
Even the latest tariffs on China, Mexico and Canada will impact South Korea indirectly by hitting demand for items that eventually end up in the US.
By Sam Kim
