[Econ & Biz] What do Donald Trump's tariffs mean for S. Korea?

Economies around the world are bracing for a potential trade war triggered by recent tariff announcements by U.S. President Donald Trump.

This week, we take a look at this matter with our trade correspondent Lee Soo-jin.

To start us off, can you tell us what has happened for the past couple of days?

Sure, so it has been a rather tumultuous couple of days on the economic front

as Trump's tariff threats sparked concerns of a global trade war.

On Saturday local time Trump announced 25-percent tariffs on goods from Canada and Mexico, while China was hit with a 10-percent tariff on various existing duty rates.

Let's take a listen to what Trump said.

"And, I don't want to use countries, I don't want to use names, but tariffs are very powerful, both economically and in getting everything else you want."

And while they were to go into effect on Tuesday, Trump on Monday, decided to pause the implementation of the tariffs for Canada and Mexico, for at least 30 days.

This comes as Canada agreed to implement a 1-point-3 billion U.S. dollar border plan which includes reinforcing the border with nearly 10-thousand front-line personnel as well as strengthening resources to respond to fentanyl and money laundering.

And Mexico,.. agreed to place 10-thousand National Guard troops along the U.S. border to prevent the flow of drugs.

But Trump's 10-percent tariff on Chinese products took effect just after midnight Tuesday.

Within minutes, China's Finance Ministry announced retaliatory tariffs of 15 percent on U.S. coal and LNG, as well as 10 percent on crude oil, farm equipment, and certain automobiles, to take effect on February 10th.

And,.. according to this expert, China's choice of which items to impose tariffs on was deliberate.

"The phenomenon here is that agricultural pick-up trucks will impact agricultural are that are very strong supporters of Donald Trump. Another targeted item was LNG, LNG companies that are also strong supporters of Trump."

2. What do Trump's tariffs mean for South Korea?

Sure, so South Korea may actually see both risks and opportunities,

in regards to the tariffs on China.

To start out with the positive, the tariffs imposed on China mean that Korean exporters may gain a competitive edge in supplying products that China previously dominated.

This means that U.S. companies may shift their supply chains to South Korean firms.

Let's take a listen.

"In markets like the semiconductor industry, companies like SK hynix already have a strong presence, and if tariffs are imposed on China, South Korean products could gain an even greater competitive advantage."

As semiconductors are South Korea's top export item, this would boost the country's trade surplus.

But the expected drop in exports of Chinese goods to the U.S. may reduce Chinese orders for South Korea's key intermediate goods.

Here's what the same expert said.

"Our country's export structure depends on selling intermediate goods to China, for them to be assembled into the final product for export to other countries. So, if demand for China's goods declines, demand for these intermediate goods will also decline."

It's also important to note that there are also growing concerns about the possibility of tariffs on the EU and South Korea as well.

3. What should be done to respond to these ongoing tariff threats?

Well, for one,.. staying proactive

will be key in this turbulent trade environment.

And the South Korean government is already doing so through measures announced just yesterday that include establishing a "Strategic Advanced Industry Fund," worth over 34 trillion Korean won, or around 23 billion U.S. dollars.

Let's take a listen.

"Ongoing global trade uncertainties, including additional tariffs on China, require close attention. We will establish the "Strategic Advanced Industry Fund" at the Industrial Bank of Korea to support high-tech sectors like batteries and biotech."

As for the private sector,.. SK Group chairman Chey Tae-won will lead a delegation to Washington, D.C. on the 19th to discuss response strategies, with a meeting with Trump reportedly under discussion.

Here's why this is important at this time.

"While Trump has not targeted Korea directly, he's threatening tariffs on virtually everybody. he said he wanted to replace subsidies for semiconductor factories with high tariffs. "

And moving forward, the expert I spoke to suggested Korean companies use local politicians in Republican-leaning U.S. areas, where many of their factories are located, to emphasize that tariffs could harm jobs and investment.

Alright, thank you for your report today.

Thank you for having me.