[Econ & Biz] U.S. tariffs impact on Korean cars, K-beauty products, and Buldak noodles

U.S. President Donald Trump has been announcing tariff rates on a daily basis now, whether it's reciprocal tariffs by country or by product, such as autos and steel.

Now, South Korean officials say there is room for negotiation, but where do we go from here?

We have our Kim Do-yeon in the studio with us for more.

Good evening, Do-yeon.

First, Do-yeon, walk us through the South Korea and U.S. trading relationship at this moment in time.

Dami, it hasn't been looking good for South Korea.

From January to April, the United States' imports hit an all-time high, but imports from South Korea actually declined, causing Korea's ranking among U.S. import partners to fall by three places from 7th last year to 10th, according to the Korea International Trade Association.

Take a listen to an expert explaining the situation.

"Even among the top 10 import partners, only China and Korea saw a decline. In Korea's case, it's notable that key Korean export items are increasingly being replaced by those from countries like Vietnam, Mexico, and Taiwan."

We also have to keep in mind that many of the items that South Korea sells to the U.S. are subject to separate tariff rates.

For example, we know autos will have 25-percent tariffs imposed under Section 232.

Autos are more than 30-percent of South Korea's exports to the U.S.

Chips and pharmaceuticals will also have their own tariff rates, and of course they are also some of South Korea's strengths in the export market.

And, the White House has made it clear that these tariffs on specific items are not up for negotiation, saying South Korea is not likely to get its own lower tariff rates for these.

2. Let's focus on autos because we have the number now.

25-percent could be big, and we saw Hyundai Motor Group expanding production in the U.S. to avoid this.

How is South Korea faring?

Now, in terms of competition.

A 25-percent tariff is applied to all items, so the playing field is still level against major competitors like Japan.

Autos and auto parts are the number one export items to the U.S. for Korea and Japan.

But, Mexico is a competitor that has an advantage over South Korea.

Take a listen.

"We should pay particular attention to Mexico. In the case of automobiles and auto parts, Mexico benefits from lower tariff rates under the USMCA, which puts Korea at a relative disadvantage in terms of price competitiveness. Moreover, Mexico's share of the U.S. import market for automobiles and parts has been expanding rapidly in recent years."

And in terms of pricing competition, currency is also something to look into.

And that is why the U.S. has been monitoring the dollar exchange rate closely as it comes up with the tariff rates.

First, take a listen to how this works.

"Let's say a 10% tariff is imposed, but at the same time, the exchange rate rises by 10%. In that case, the price doesn't become 10% higher — even with the tariff, thanks to the weaker currency, it effectively stays at one dollar. That's why a weaker currency neutralizes the impact of tariffs. So we end up comparing how much the yen has weakened versus how much the won has weakened."

Now, that is why South Korea and Japan are likely to enjoy better tariff rates than China.

While the won and yen are decided according to market trends, the Chinese yuan is not really decided in that way.

3. Right now let's go back to the 25 percent of course it's open to negotiation, but if autos, chips, and pharmaceuticals are getting their own tariff rates, what should South Korea be concerned about?

Dami, there are two items that come to mind for this.

K-beauty products and ramyeon.

These two items have been on the rise when it comes to exports to the U.S.

In fact, South Korea ranks first in cosmetics exports to the U.S., and as we all know Buldak noodles has been some sort of a phenomenon in the U.S.

Now, let's focus on the beauty products first.

Many of the items popular in the U.S. are indie brands that are sold on Amazon.

Of course, these are subject to the reciprocal tariffs.

There are some that produce locally in the U.S., such as the biggest Korean OEM and ODM cosmetic companies, but that's a small portion.

Also, big cosmetic brands are looking for ways to start local production.

"In particular, major Korean cosmetics companies like AmorePacific and LG don't have local manufacturing facilities in the U.S. right now, so they're considering options like acquiring existing plants through M&A, since building new factories on-site isn't feasible in the immediate term."

On top of this, consumers are smart.

There have been trends of people hoarding Korean sunblock before the tariff hit to survive the summer in the U.S.

Now, as for the ramyeon industry the two biggest players are facing different fates.

Nongshim, the maker of Shin Ramyeon, localized production in the U.S. for all its supplies.

Samyang the maker of Buldak exports all from South Korea so the company is closely monitoring the negotiation process.

Do-yeon, thanks for coming in tonight.