Tariff shock: S. Korea grapples with steep reciprocal tariffs and auto export levies

And the White House's announcement of a 26-percent tariff on South Korea is prompting fresh alarm over bilateral trade as both government officials and corporate leaders attempt to understand the broader repercussions of this latest decision by the Trump administration.

Our correspondent Moon Hye-ryeon reports.

The Trump administration's latest round of tariffs has sparked concerns for South Korea's export-dependent economy.

The 26 percent tariff imposed on South Korean exports to the U.S. is notably higher than what many analysts had anticipated—especially given the existing Free Trade Agreement between the two countries.

The rate surpasses the tariffs applied to other U.S. allies, such as the European Union and Japan, making it the highest among Washington's FTA partners.

Experts say there are several reasons why Washington is citing Seoul's tariffs on U.S. agricultural goods as a key factor behind the levies.

"The U.S. appears to be focusing on the agricultural sector because it has a high volume of agricultural exports. Also, South Korea's trade surplus with the U.S. was originally below 50 to 60 billion dollars. If a trade deficit with a specific country rapidly increases over a few years, U.S. federal law requires an investigation, and appropriate measures can be taken in response."

These tariffs mark a clear shift in U.S. trade policy, reinforcing a protectionist stance that makes no exceptions — even for close allies.

For South Korea, this necessitates a shift in strategy from pledging investments in the U.S.

"Trump just says, "Thanks for the investment, tariffs are working, so now we're going to put tariffs on everybody, including you." So I think what may work, though, is trying to work the so-called "quid pro quo" – we're going to make this investment if you do not increase the tariffs."

Beyond reciprocal tariffs, levies on auto exports, which took effect shortly after midnight in Washington, are expected to hit hard.

"Half of all cars exported abroad are shipped to the U.S., meaning Hyundai and Kia will take the biggest hit. In particular, Korea's GM branch, which sends roughly 85 percent of its vehicles to the U.S., is likely to suffer a direct blow."

This has prompted officials in Seoul to respond.

Acting President Han Duck-soo swiftly convened an emergency meeting to discuss support measures for affected industries, while Trade Minister Ahn Duk-geun met with industry insiders to pledge high-level negotiations with Washington and the rapid rollout of countermeasures.

With the Trump administration threatening levies on semiconductors, South Korea now faces mounting pressure to secure a deal or risk a further slowdown in its manufacturing sector.

Moon Hye-ryeon, Arirang News.