S. Korea braces for U.S. tariffs with automakers exposed the most

Now as mentioned earlier the deadline for country-specific U.S. tariffs is fast approaching.

That being said my colleague Kim Do-yeon spoke to a number of scholars here for their thoughts on an effective South Korean trade strategy.

Do take a listen.

The stakes couldn't be higher, as South Korea's heavy dependence on exports — especially to the United States — leaves its core industries vulnerable.

With a July 8th deadline fast approaching, Seoul is racing to secure a deal that shields its automakers and semiconductor producers from hefty new tariffs.

"I believe Korea needs to emphasize that its economic growth leads to more factories and jobs being created in the United States, and use that to steer negotiations in a direction that benefits both countries."

Recent moves by Hyundai Motor Group underscore that point, with the company pledging over 21 billion dollars in investments across the U.S. over the next three years.

The move perhaps testifies to experts' claims that autos are the most exposed.

Under Section 232 of the U.S. Trade Expansion Act, Washington currently slaps a 25 percent tariff on imported vehicles and auto parts — a duty both Korea and Japan have been pushing to reduce.

"Among all the tariffs Korea faces from the U.S. right now, the most critical issue is the auto sector. If this isn't resolved, we're likely to see significant damage — not just for finished cars, but also for parts, steel and aluminum, since all these tariffs are heavily concentrated on automobiles."

Without a breakthrough, Korea's automakers and a web of suppliers could suffer severe losses.

Some experts suggest that ramping up local manufacturing in the U.S. may be the most immediate way to cushion the blow.

"By using production facilities over there, we can effectively offset tariffs on parts as well. So at this point, I think expanding and maximizing manufacturing operations in the U.S., rather than producing everything domestically, is actually the best alternative we have."

But they caution this could mean fewer jobs and contracts for Korea's own factories and parts makers.

That's why experts say tariffs will ultimately need to be tackled at the negotiating table.

They point out that South Korea's shipbuilding capacity could serve as leverage — while even adjustments to defense cost-sharing might come into play.

Kim Do-yeon, Arirang News.