S. Korea eyes 15% tariff rate as most viable with U.S. talks nearing deadline

Continuing on the ongoing trade deal, our Moon Ji-young has broken down the crucial points to watch in the Korea-U.S. talks.

With reciprocal tariffs looming large, the exact outcome of South Korea's tariff negotiations is also drawing close attention.

There's pressure on Korea to lower reciprocal tariffs to the same level as the EU and Japan both reaching 15-percent tariff deals with the U.S.

While a 15-percent rate would still be a burden for an export-driven economy, Korean companies would still be competitive in the U.S. market, as Japan and the EU have similar export structures to the U.S.

"The primary strategy for these tariff negotiations can be seen as securing a tariff rate of 15 percent or lower, consistent with Japan's deal, while simultaneously conceding more than what the U.S. demands, all without incurring significant losses for South Korea."

Regarding 25 percent sectoral tariffs on automobiles, any Korea-U.S. tariff deal would be hard to deem successful if the rates are set higher than the 15 percent rates secured by Japan and the EU.

It seems that lowering the 50 percent sectoral tariffs on steel and aluminum will be difficult for Korea, given that both Japan and the EU failed to reduce them.

With the EU reportedly agreeing to introduce a quota system that exempts 50 percent tariffs on steel and aluminum products up to a certain level, Korea could also benefit from a steel quota application.

The opening of the agriculture industry remains a great concern since Korea faces significant domestic opposition.

A key point in the final negotiation process will be how effectively Korea can fend off further opening of its agricultural market, including rice and beef aged over 30 months.

Ultimately, it boils down to how much Korea can reduce the U.S.'s trade deficit with South Korea.

"The strategy proposes to maintain South Korea's exports to the U.S. while increasing imports from the U.S.

If Korea shifts its over 70-percent reliance on Middle Eastern crude oil and LNG to U.S. sources, it could significantly balance the trade deficit with the U.S. without incurring substantial losses."

While Korea has reportedly proposed a shipbuilding investment project, experts say it is also crucial to have comprehensive investment plans that ensure win-win opportunities across various fields.

Moon Ji-young, Arirang News.