Concerns for S. Korea as Trump threatens tariffs for countries with VAT system

U.S. President Donald Trump continues to push for his America First trade agenda now with a warning that he will treat countries with value-added tax systems the same as those with tariffs, raising fears of a hit to South Korea.

Lee Seung-jae reports.

U.S. President Donald Trump said Saturday that Washington will treat countries with a value-added tax system, the same as those with tariffs in order to help calculate reciprocal duties on other countries.

The comment raises concerns for South Korea, which, unlike the U.S., collects value-added tax.

Typically, companies in countries with a VAT system, including South Korea, receive a VAT refund when exporting to the U.S. and only have to pay a relatively low sales tax.

However, U.S. companies exporting to foreign countries have to pay a high VAT rate that they do not pay in the U.S.

And for that reason, Trump has criticized VAT as being an unfair trade barrier for the U.S.

Since South Korea's VAT rate is 10 percent, higher than the average U.S. sales tax of 6.6 percent as of 2023, it's possible that Trump may also consider it an "unfair tariff" fueling speculation that Trump will impose a 10-percent reciprocal tariff on all South Korean imports in April.

Amid concerns over Trump's trade policies, Deputy Minister for Trade Park Jong-won at the Ministry of Trade, Industry and Energy will visit the United States on Monday.

During the 5-day visit, Park will meet with high-ranking officials from the U.S. Department of Commerce and the Office of the U.S. Trade Representative to discuss trade and other pending issues.

This will be the first official visit to Washington by a high-ranking trade official since President Trump took office.

Park is expected to hear the specifics of the trade policies under the Trump administration, and convey Seoul's position on the matter.

Lee Seung-jae, Arirang News.