News

S. Korea and U.S. agree to lower 'reciprocal' tariffs to 15%

2025/07/31 22:42

We begin with the tariff deal sealed between South Korea and the U.S. "Reciprocal" tariffs have been set at 15 percent for South Korea in exchange for the country's billions of dollars worth of investment in the U.S. Park Jun-han starts us off. South Korea and the U.S. announced a major tariff agreement on Wednesday, local time, to lower "reciprocal" tariffs from 25 percent to 15 percent. The deal, however, required South Korea to commit to a 350 billion U.S. dollar investment package. The 350 billion dollars will be in the form of an investment vehicle, and will be spent through equity investments, loans, and credit guarantees. An additional 100 billion dollars will be spent on purchasing U.S. energy, mostly liquefied natural gas. The South Korean government said sector-specific tariffs involving semiconductors and pharmaceuticals are guaranteed most-favored-nation status, ensuring treatment as favorable as that afforded to other nations. So we've made sure that if we face tariffs in the future on things like semiconductors or pharmaceuticals, we'll receive the same treatment as most-favored-nation level, ensuring we're not at a disadvantage compared to other countries' agreements. Through the deal, tariffs on automobiles have also been reduced from the current 25 percent to 15 percent. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol commented after the agreement that South Korea's shipbuilding project — which involves large-scale investments by South Korean private shipbuilders in the U.S. — played a key role in the tariff negotiations. "The most notable part of today's agreement is the 150 billion U.S. dollars South Korea-U.S. shipbuilding cooperation package, a project called "Make American Shipbuilding Great Again." This agreement will fund new US shipyard construction, workforce training, supply chain rebuilding, and ship maintenance, leveraging South Korea's shipbuilding expertise. The remaining 200 billion dollars will be spent to support strategic sectors that are closely related to the country's economic security. Those sectors include semiconductors, batteries, nuclear energy, biotechnology and critical minerals. South Korea also pledged to purchase 100 billion dollars worth of U.S. energy, primarily liquefied natural gas, over four years, redirecting existing import needs without any added economic burden. The last-minute tariffs agreement has reduced uncertainty for South Korean companies, which account for 19 percent of the country's global exports, ensuring they compete on equal or better terms than their rivals. Further details about the deal will be finalized in ongoing talks. Park Jun-han, Arirang News.

[Weather] Searing heat with strong UV rays nationwide

2025/07/31 22:41

Searing heat continues to grip the entire nation. Tomorrow brings more of the same — scorching sun, sweltering air, and no sign of relief just yet. The extreme heat will persist, with daytime temperatures once again reaching above 35 degrees in many regions. Many of us in the capital area felt relief today thanks to that cloud coverage. But there will be nothing but sunshine tomorrow with very strong UV rays nationwide. Brace for another sweaty night, and it looks like here in the capital area is having the roughest summer this year with a low of 28 degrees Celsius in Seoul, Daegu begins the day at 24 degrees. By the afternoon, most regions will see highs soaring to 36 degrees Celsius. The intense heat is here to stay. Then, around the middle of next week, rainfall in the central regions may help to ease the extreme heat that's gripped the nation for weeks. That's Korea for you, here's a look at the international weather conditions.

As humanitarian crisis intensifies in Gaza, more countries state the need to recognize State of Palestine as a country

2025/07/31 22:41

Another shooting took place in Gaza as people queued up for food, leaving at least 48 dead. This comes as Canada has outspokenly stated its intentions to formally recognize the State of Palestine. Ahn Sung-jin has the details. Canada says it plans to join several countries in formally recognizing Palestine as a state. According to Prime Minister Mark Carney, during a cabinet meeting on Wednesday, Canada intends to do so at a meeting of the UN General Assembly in September this year, as long as preconditions are met. "This intention is predicated on the Palestinian Authority's commitment to much-needed reforms, including commitments by the Palestinian Authority's President Abbas, to fundamentally reform its governance, to hold general elections in 2026, in which Hamas can play no part, and to demilitarize the Palestinian state." Canada also signed the New York Call, a joint statement of the ministers of foreign affairs from 15 countries, including Australia, France, and Spain, that calls for an immediate ceasefire, release of hostages, and a two-state solution where Israel and Palestine live within secure and recognized borders. Conditions in Gaza remain dire. Israeli soldiers reportedly killed at least 48 Palestinians. According to Associated Press on Wednesday, IDF soldiers opened fire on a crowd at a key gateway for aid trucks at a checkpoint in the north of the Strip. This incident comes as Trump's special envoy to the Middle East, Steve Witkoff, is headed to Israel for talks on the humanitarian crisis in Gaza. UN agencies have repeatedly stated that the population has already exceeded the threshold for famine in the Gaza Strip. Ahn Sung-jin, Arirang News.

S. Korea unveils sweeping tax reforms targeting fiscal sustainability

2025/07/31 22:40

The government unveiled its 2025 tax reform framework, aiming to both rebuild the nation's weakened revenue base for fiscal sustainability, and support economic growth and livelihoods. Our finance correspondent Moon Ji-young explains. The 2025 tax reform bill introduces a mix of targeted tax credits for strategic industries and welfare, alongside adjustments to corporate and capital gains taxes. "Over the past three years, our tax revenue base has weakened rapidly, leading to a significant drop in the tax burden ratio. Therefore, this year's tax reform bill prioritizes reinforcing the weakened tax revenue base for fiscal sustainability, while also supporting economic strength and stabilizing people's livelihoods" The reform package aims to enhance tax credits for R&D and investment in future strategic industries, including AI. Furthermore, to enhance K-content competitiveness, tax credits for webtoons will be newly introduced, and tax support for video content creation will be expanded. Beyond these targeted incentives, the framework includes tax cuts designed to encourage corporate payouts and boost the stock market. Specifically, to encourage high dividends, a separate taxation system for dividend income from high-dividend companies is being introduced. This approach excludes these dividends from the comprehensive financial income tax base, allowing earnings from stock dividends to be taxed independently, rather than combined with other income. Despite the debate over tax cuts for the super-rich, a 35 percent tax rate is expected to be applied to the highest dividend income bracket. On the other hand, the bill aims to restore tax equity and rebuild the nation's revenue base based on the principle of ability to pay. The country's corporate tax rate will be raised by one percentage point across the board, with the top corporate rate increasing to 25 percent, effectively reversing a cut introduced by the previous administration. The bill also tightens capital gains tax rules by lowering the threshold for major shareholders. While currently only those holding 5 billion won, or roughly 3-point-6 million U.S. dollars, in a single listed stock are taxed, that threshold will be reduced to 1 billion won, or just under 720 thousand dollars. Tax support will be expanded for low-and middle-income households, with measures such as an increase in the income deduction limit for credit card use by up to 50억 won, or roughly 360 dollars, depending on the number of children for families. The tax burden on self-employed individuals and small business owners is also expected to be alleviated. The bill will first go through Cabinet meetings before being submitted to the National Assembly for final approval. Moon Ji-young. Arirang News.

Samsung Electronics Q2 operating profit plunges 55% y/y due to low semiconductor earnings

2025/07/31 22:38

Samsung Electronics on Thursday reported a second-quarter operating profit of 3-point-4 billion U.S. dollars. That's a 55 percent plunge from a year ago, and over 21 percent lower than market expectations. In its regulatory filing, the company also recorded a net income of 5-point-1 trillion won which marks a 48 percent drop on-year. This was largely due to sluggish demand for high bandwidth memory chips. The semiconductor division posted an operating profit of only 400 billion won, which is the lowest since the fourth-quarter of 2023. However, despite weak profits, overall chip sales climbed 11 percent on-year, driven by demand for premium server chips and increased foundry orders.

June sees rebound in production, consumer spending also rises

2025/07/31 22:38

According to data released by Statistics Korea on Thursday, South Korea's industrial output rebounded in June for the first time in three months. This was largely thanks to strong performances in the semiconductor and automobile sectors. Consumer spending also turned upward for the first time in four months, with increased sales of clothing and cosmetics. However, facility investment fell for the fourth consecutive month due to a decline in transportation equipment investment, marking the longest downturn in seven years. Overall, the all-industry production index for June stood at 113-point-8, an increase of 1-point-2 percent from the previous month.

July marks longest stretch of tropical nights in Seoul for 117 years

2025/07/31 22:38

Hot weather in Korea isn't just a daytime issue, as it lingers well into the night. Seoul experienced 22 tropical nights this July alone, the most for the month in 117 years. Our Park Kun-woo has more. Seoul's summer nights continue to stay hot and longer than usual. At least 22 tropical nights were recorded in Seoul this July. That's the longest period for the month in 117 years since related data first began to be compiled in 1908. A tropical night refers to when the overnight low ---between 6 PM and 9 AM the next day ---does not drop below 25 degrees Celsius. The previous record for the longest stretch of tropical nights in July was set in 1994, with 21. But with one more day left till August in Korea, this year's record may climb further. Adding to the heat, Seoul also logged its highest-ever overnight low for July on Wednesday into Thursday at 29-point-3 degrees. The previous was 29-point-2 degrees, seven years ago, according to the Korea Meteorological Administration. "The Tibetan and North Pacific high-pressure systems have overlapped over Korea, trapping heat in the atmosphere. Hot, humid air from the south is also being drawn in, while intense sunlight continues, making scorching days and tropical nights persist." Asked whether this trend may continue due to climate change, the KMA said it's hard to predict as tropical nights are largely driven by variables including complex pressure patterns in the atmosphere. Still, the weather agency forecasts tropical nights to continue for the time being, although some rain is expected after August 6. The authorities are advising people to take precautions against heat-related illnesses, including keeping indoor temperatures and humidity moderate, ensuring proper ventilation, staying hydrated, and doing light exercises before bed for a good night's sleep. Park Kun-woo, Arirang News.

Rival parties stand poles apart on S. Korea-U.S. trade deal

2025/07/31 22:37

Rival parties in the National Assembly are poles apart on the U.S. trade deal. The ruling Democratic Party welcomed the agreement, calling it the result of a firm defense of national interests and a valuable achievement of President Lee's pragmatic diplomacy. DP floor leader Kim Byung-kee said Thursday the deal would further strengthen the bilateral alliance and industrial ties. The main opposition People Power Party expressed concern that Korea may have conceded too much, while acknowledging that the 15 percent tariff rate was reasonable. PPP floor leader Song Eon-seog pointed out that the pledged investments in, and imports from, the U.S. are excessive --surpassing the country's foreign exchange reserves.

President Lee says export uncertainties removed; Lee-Trump summit expected within 2 weeks

2025/07/31 22:36

South Korean President Lee Jae Myung notes that the trade deal with the U.S. has eliminated export uncertainties. With this, a South Korea-U.S. summit is picking up speed, which is set to take place within two weeks. Our Presidential Office Correspondent Yoon Jung-min reports. Uncertainties in export conditions have been substantially eliminated, and South Korea has crossed a "major hurdle." That was the assessment made by President Lee Jae Myung of the U.S. trade deal, as he noted the need to navigate an international trade order that's being reorganized. "Through flexible, pragmatic diplomacy centered on national interests, we must wisely overcome the waves of the external environment that change fast." Presiding over a weekly meeting with his aides on Thursday, the President instructed the officials to fully prepare for follow-up measures, as well as long-term tasks, such as expanding consumption at home and diversifying export markets. With a major diplomatic challenge somewhat removed, summit diplomacy between South Korea and the U.S. is expected to pick up speed, which has been stalled since President Lee Jae Myung took office in June. The first Lee-Trump summit is expected within two weeks. "I heard President Trump asked Secretary Rubio to set a date for next week, but considering schedules, it'll take place within two weeks." Details of the summit, including the date, could be discussed when South Korea's Foreign Minister Cho Hyun meets his U.S. counterpart Marco Rubio in Washington on Thursday, local time. The summit agenda is expected to include setting out details of the deal's framework. Security issues, such as the allies' defense cost-sharing and purchasing U.S.-made weapons, were not addressed this time, but could be brought up when the two leaders meet. Earlier in the day, South Korea's Defense Minister Ahn Gyu-back spoke over the phone with U.S. Secretary of Defense Pete Hegseth, where they agreed to "modernize" the alliance and expand cooperation in shipbuilding. All this, as the South Korean leader says he expects Seoul and Washington to further strengthen their economic cooperation and alliance. Yoon Jung-min, Arirang News.

Is US$ 350 billion investment for 15% tariff rate a good deal?

2025/07/31 22:35

Now let's break this down and touch on the important aspects of this trade deal. We have our Kim Do-yeon here in the studio with us. First what a build-up of a couple of weeks to this point. And officials say it's not done. What does this mean? That's right, Dami. The dust is settling — we now know a 15-percent tariff will apply. But as you mentioned, it's not over. Negotiations may be done for now, but the broader fight over tariffs and the investment details is far from settled. First here's what Deputy Prime Minister Koo Yun-cheol, who led the negotiations in Washington, had to say. "A 15-percent tariff is undoubtedly challenging, especially for a country that has a free trade agreement with the U.S. But if our companies can leverage their creativity and competitiveness, this could turn into a new opportunity. While the broader agreement is done, we will continue to work out the specifics through further talks with the U.S." Still, at least for now, the agreement was welcomed by Korea's six largest business groups including the Korea Chamber of Commerce and Korea Enterprises Federation. They issued a joint statement backing the outcome, noting that the focus areas for investment — shipbuilding, semiconductors, batteries, and bio — are strategic industries where Korea holds global competitiveness. Their hope: this will help Korean firms gain more market share in the U.S. We do need to focus on MASGA the shipbuilding aspect of the investment and the other 200 billion U.S. dollar investment. Let's cut to the chase is this a good deal? To answer that, let's look at how the government frames it especially in contrast to Japan, Korea's biggest rival in the U.S. trade market. Japan recently pledged a 550 billion dollar investment in return for a similar tariff deal. "South Korea has a trade surplus of 66 billion dollars with the U.S., while Japan's is around 68-point-5 billion. Yet our total investment fund is smaller. If you exclude the 150 billion led by our own companies, our actual contribution is 200 billion—just 36 percent the size of Japan's." That 150 billion refers to MASGA — a South Korea-led shipbuilding initiative, seen as a cornerstone of this agreement. The rest, the 200 billion, will be largely controlled by the U.S. Seoul has been keen to highlight this structure to draw a distinction from Japan's pledge. Japan's 550 billion dollar investment is like Korea's 200 billion dollar investment with U.S. leading it President Trump after Japan's deal announcement said "90 percent of the profits go to the U.S." Okay, but in terms of tariff rates while South Korea enjoyed no tariffs it's now at the same level as Japan. So all in all, what can we say about this? That's right, Dami. Some may say all that investment, but higher tariff rates. But the FTA era is largely seen as already over by many experts and expecting to keep no tariffs was really a big hope. So the playing field might be levelled right now and Korean industries will need to work on this going forward. Take a listen to an expert. "The real game has now started. This is because we only have the framework and a brief agreement. There isn't a detailed plan out there. Will this deal impact South Korea positively and lead to a boost in the domestic economy? That's the bigger issue." But to highlight companies that will be impacted it's the automakers. When it comes to cars, an industry with fierce competition, while Korean cars were tariff-free their competitors, Japan and the EU, paid 2-point-5 percent. Now, that advantage has disappeared, leveling the playing field in terms of price competitiveness. What's also interesting is the negotiation process. This deal came just two days before the 25-percent tariffs were about to kick in. Tell us about the pressure and tactics Korean officials used that we know so far. That's right South Korea, as one of the major trade partners with the U.S., was one of the last ones to finalize this deal. Having said that, the new administration only kicked off last month, and it needed some time to finalize the Cabinet to form this trade delegation. And when that was started, the discussions with the U.S. and even within the Korean government, weren't so easy. "They brought up various issues, things like the age limit for cattle and rice, which are already well-known points of contention. Naturally, there were heated exchanges. Even within our own government, when discussing negotiation strategies, there were raised voices between ministries." Now, agriculture and livestock market access was a contentious issue, but was not included in the deal, despite strong pressure from the U.S. There were concerns for Korean farmers leading up to the negotiations as well. Officials revealed that during negotiations, they presented a photo from the 2008 mass protests in South Korea against U.S. beef imports—which drew over 10 million demonstrators reminding U.S. officials it's a red line for them. On another side note, while President Trump did not meet with any other trade delegations, he made time to meet with South Korean officials. He later said this was a sign of his "respect for South Korea."

Is S. Korea-U.S. tariff deal a win-win solution?

2025/07/31 21:34

Tariffs of 15% on South Korean exports in return for a whopping 450 billion dollar investment in the U.S. That's the deal that settled months-long tariff talks between Seoul and Washington. Following the dramatic agreement will be a summit between the leaders of the two countries. Tonight, we're joined by Hannah Kim, associate professor at Sogang University's GSIS. Hello, professor Kim. Also connecting with us is Hwa-gyun Kim, professor of banking and finance at the Mays Business School of Texas A&M University. Welcome. 1. (HWA-GYUN KIM) 150 billion out of the 350 billion will go to shipbuilding for the U.S. It's the MASGA project that's at the heart of the final deal with Washington. What's so special about shipbuilding that eventually convinced Trump? 1-1. (HWA-GYUN KIM) What, in terms of shipbuilding, are we contributing? Are we building ships? Providing repairs or maintenance? What are we good at? And what do we gain from it? 2. (HANNAH KIM) And 200 billion is being invested in semiconductors, nuclear power, batteries, and biotech ---these are fields in which Korean firms excel. On top of that, about 100 billion worth of LNG and other energy products will be imported over 3-and-a-half years. Could this be called the beginning of so-called 'energy diplomacy'? 3. (HWA-GYUN KIM) Japan is investing 550 billion in the U.S., and the EU, 600 billion. South Korea is pouring in 350 billion dollars. Would you say this is an appropriate scale of investment considering South Korea's GDP? 4. (HANNAH KIM) Another huge part of Wednesday's deal is that South Korea will get favorable treatment when it comes to future tariffs on semiconductors and pharmaceuticals. Does that mean we are being specially favored, especially compared to Japan or the EU? 5. (HWA-GYUN KIM) Trump said U.S. products will enter the Korean market tariff‑free. Will that affect our industries? As far as I understand, tariffs were never a problem for American products to enter Korea. 6. (HANNAH KIM) The tariff deal, fortunately, didn't include anything about defense costs, something that Trump wanted to handle as a one-package deal. Why was it left out? Could it come up again at any time? 7. (HANNAH KIM) The leaders of South Korea and the U.S. are meeting within the next two weeks. How will the two sides spend their first face-to-face talks? Talk about the tariff deal? Or the ROK-U.S. alliance? 8. (HWA-GYUN KIM) Countries around the world are facing unprecedented tariff threats from the Trump administration. In this new world trade order shaped by Trump, how should South Korea respond going forward? Alright, professor Kim, thanks for sharing your insight as always. Professor Hannah Kim, thanks so much for your analysis. We appreciate it.

POWER OF KOREAN PASSPORT, POPULARITY OF ITS APARTMENTS

2025/07/31 19:44

Welcome to yet another edition of Press Perspective. It's Thursday July 31st here in Seoul. I'm Min Sunhee. It's time for our talk on issues of social interest here that made international headlines as well. For more I have Hanna with French weekly paper La Tribune Dimanche. Hanna welcome back. I also have writer Colin with the pundit's take on the day's discussion. Colin it's good to have you here. Colin, the peak summer holiday period for Korea is late July to early August. You've been here for a while now, do share with us one memorable way of indulging in the season here in the country. Hanna, quite a number of Koreans also seek to spend their summer overseas and findings show the South Korean passport ranks second in terms of global power. What is the significance of this ranking? Colin, let's now talk about another headline related to South Korea by the foreign media. The LA Times carried an interesting piece about the popularity of apartments here in the country as opposed to individual houses as is the case in the U.S. What are your thoughts on this discrepancy? Hanna, this article also touches upon the reason behind the popularity of apartments in Korea. Do share this reason with us as well as your own thoughts. Hanna, what was your first impression regarding Korea's preferred style of residence? Colin, what has been the impact of such similar residence style on the Korean society? Hanna, speaking about the society here. A new study by Statistics Korea shows South Koreans are sleeping less and spending more time on screens. Do tell us a bit more about this study, and what are your observations with regard to the daily impact of smartphones on South Koreans? Colin, staying with this study by Statistics Korea. We are also spending less time on meals and more of us are dining alone. What are your takeaways with regard to this reality? All right.

Scorching sun, sweltering air continues nationwide

2025/07/31 19:43

The intense heat continues to grip the entire nation. Tomorrow brings more of the same — scorching sun, sweltering air, and no sign of relief just yet. The extreme heat will persist, with daytime temperatures once again reaching above 35 degrees in many regions. Many of us in the capital area felt a lot of relief today thanks to that cloud coverage. But there will be nothing but sunshine tomorrow with very strong UV rays nationwide. Tropical nights are expected to continue. Here in the capital area, it seems like we're having the roughest summer this year with a low of 28 degrees Celsius. Chuncheon and Daejeon begin the day at 25 degrees. By the afternoon, most regions will see highs soaring to 36 degrees Celsius. Then, around the middle of next week, rainfall is expected in the central regions, which may help ease the extreme heat that's gripped the nation for weeks. That's Korea for you, here's a look at the international weather conditions.

Disaster management officials, experts from Asia-Pacific gather in Incheon to enhance disaster response

2025/07/31 19:42

Disaster management authorities and pundits from the Asia-Pacific are currently gathered here in South Korea to address strategic cooperation against calamities. Shin Ha-young reports. Natural disasters, including floods and earthquakes, continue to threaten millions around the world and Asia-Pacific economies are no exception. Amid these challenges, South Korea's Ministry of the Interior and Safety is hosting this year's APEC meetings on disasters, in the western port city of Incheon from Wednesday, with disaster management officials and experts from across the Asia-Pacific participating to strengthen cooperation on risk reduction. As part of the three days of meetings, the Emergency Preparedness Working Group convened on Wednesday to explore ways to strengthen practical cooperation, with a focus on digital tools for disaster risk management. The Senior Disaster Management Officials Forum, scheduled for Thursday, is expected to build on those discussions and work toward actionable policy steps and stronger joint responses to emerging threats. "The key focus of this conference is to strengthen international cooperation in responding to complex disasters such as climate change and pandemics. With its advanced ICT capabilities, South Korea has a well-developed early warning system and is well positioned to contribute to global efforts, including the UN's Early Warning for All initiative." Alongside the meetings, the interior ministry is partnering with New Zealand's National Emergency Management Agency to conduct joint disaster drills, collaborate on research, and share information regularly to help reduce disaster risks. "From an emergency management perspective, the knowledge and the advancements that Korea has are well in advance of New Zealand. We're really looking forward to understanding how we can share knowledge, and how we can share our experiences to make both countries stronger, particularly, as I said earlier, in the light of the changing hazard scape that we all face." A disaster safety exhibition featuring Korea's latest technologies will be open through Sunday, highlighting the country's innovations and efforts to expand its presence in the global disaster-tech market. Shin Ha-young, Arirang News.

Seoul confirms defection of N. Korean man after July 3 DMZ crossing

2025/07/31 19:41

The intentions of a North Korean man to defect to South Korea have been confirmed by officials here. According to the Unification Ministry on this Thursday the confirmation follows a comprehensive investigation. The North Korean man reportedly crossed the border on July third and was taken into custody by South Korean troops. He is now under government protection and set to enter South Korea's standard resettlement program.

As humanitarian crisis intensifies in Gaza, more countries state the need to recognize State of Palestine as a country

2025/07/31 19:41

On the international front. Canada is the latest country to share intentions to recognize Palestine as a state amid Israel's continued military offensive in Gaza. Ahn Sung-jin explains. Canada says it plans to join several countries in formally recognizing Palestine as a state. According to Prime Minister Mark Carney, during a cabinet meeting on Wednesday, Canada intends to do so at a meeting of the UN General Assembly in September this year, as long as preconditions are met. "This intention is predicated on the Palestinian Authority's commitment to much-needed reforms, including commitments by the Palestinian Authority's President Abbas, to fundamentally reform its governance, to hold general elections in 2026, in which Hamas can play no part, and to demilitarize the Palestinian state." Canada also signed the New York Call, a joint statement of the ministers of foreign affairs from 15 countries, including Australia, France, and Spain, that calls for an immediate ceasefire, release of hostages, and a two-state solution where Israel and Palestine live within secure and recognized borders. Conditions in Gaza remain dire. Israeli soldiers reportedly killed at least 48 Palestinians. According to Associated Press on Wednesday, IDF soldiers opened fire on a crowd at a key gateway for aid trucks at a checkpoint in the north of the Strip. This incident comes as Trump's special envoy to the Middle East, Steve Witkoff, is headed to Israel for talks on the humanitarian crisis in Gaza. UN agencies have repeatedly stated that the population has already exceeded the threshold for famine in the Gaza Strip. Ahn Sung-jin, Arirang News.

June sees rebound in production, consumer spending also rises

2025/07/31 19:40

Meanwhile findings by Statistics Korea show industrial output rebounding in June for the first time in three months. Analysts are linking the rebound to the semiconductor and automobile sectors. Consumer spending also gained ground for the first time in four months with clothing and cosmetics driving up sales. In contrast facility investment remained in negative territory extending its fall for the fourth month in a row.

Samsung Electronics Q2 operating profit plunges 55% y/y due to low semiconductor earnings

2025/07/31 19:40

Samsung Electronics has recorded a second-quarter operating profit of 4-point-7 trillion Korean won or 3-point-4 billion U.S. dollars. Now this is a 55-percent plunge on year and over 21 percent lower than market projections. Officials are linking the weak numbers to the company's chip division where operating profit plummeted about 94 percent in the second quarter on year. Yet despite the slowing profit overall chip sales rose 11 percent on year driven by demand for premium server chips and increased foundry orders.

U.S. Fed freezes rates despite pressure from Trump

2025/07/31 19:40

In other news. The U.S. Federal Reserve has decided to hold steady its benchmark interest rate for the fifth session in a row. Lee Seung-jae reports. As widely anticipated, the U.S. Federal Reserve left its interest rates unchanged on Wednesday, holding its benchmark lending rate steady in the 4-point-2-5 to 4-point-5 percent range. "Today, the Federal Open Market Committee decided to leave our policy interest rate unchanged. We believe that the current stance of monetary policy leaves us well-positioned to respond in a timely way to potential economic developments." According to Powell, the U.S. Fed remains firmly focused on the dual mandate of maximum employment and stable prices, stressing that the economy is in a solid position despite ongoing uncertainty. He added that the unemployment rate remains low, and that the labor market is considered at or near full employment, while inflation is running slightly above the Fed's 2-percent long-term target. The latest decision also came despite recent public pressure from President Donald Trump urging a rate cut. And earlier on Wednesday, Trump blamed Powell for the high interest rates, stressing that they hurt the American people. "Each point that this gentleman keeps up costs us 365 billion dollars a year, think of that, one point, 365 billion dollars. If you bring it down a point, we save 365. We should be the lowest interest rate. And we're not. We're 38, number 38 because of the Fed. It's all because of the Fed. He's done a bad job." In a rare move, two Republican-appointed Fed governors, Christopher Waller and Michelle Bowman dissented, signaling their preference for a rate cut of 25 basis points. That marks the first time since 1993, that two Fed governors have dissented on the same rate decision. Waller argued that while tariffs may temporarily push prices higher, the inflation impact will be short-lived, with levels returning to normal by next year. The next FOMC meeting is slated for September, with many anticipating a rate cut during the sixth scheduled meeting of the year. The rate freeze means the rate gap with the Bank of Korea stands at 1-point-7-5 to 2 percent. Lee Seung-jae, Arirang News.

S. Korea unveils sweeping tax reforms targeting fiscal sustainability

2025/07/31 19:39

The government is looking to reform its fiscal policy to address a substantial shortfall in tax revenue. Our finance correspondent Moon Ji-young has details. The 2025 tax reform bill introduces a mix of targeted tax credits for strategic industries and welfare, alongside adjustments to corporate and capital gains taxes. "Over the past three years, our tax revenue base has weakened rapidly, leading to a significant drop in the tax burden ratio. Therefore, this year's tax reform bill prioritizes reinforcing the weakened tax revenue base for fiscal sustainability, while also supporting economic strength and stabilizing people's livelihoods" The reform package aims to enhance tax credits for R&D and investment in future strategic industries, including AI. Furthermore, to enhance K-content competitiveness, tax credits for webtoons will be newly introduced, and tax support for video content creation will be expanded. Beyond these targeted incentives, the framework includes tax cuts designed to encourage corporate payouts and boost the stock market. Specifically, to encourage high dividends, a separate taxation system for dividend income from high-dividend companies is being introduced. This approach excludes these dividends from the comprehensive financial income tax base, allowing earnings from stock dividends to be taxed independently, rather than combined with other income. Despite the debate over tax cuts for the super-rich, a 35 percent tax rate is expected to be applied to the highest dividend income bracket. On the other hand, the bill aims to restore tax equity and rebuild the nation's revenue base based on the principle of ability to pay. The country's corporate tax rate will be raised by one percentage point across the board, with the top corporate rate increasing to 25 percent, effectively reversing a cut introduced by the previous administration. The bill also tightens capital gains tax rules by lowering the threshold for major shareholders. While currently only those holding 5 billion won, or roughly 3-point-6 million U.S. dollars, in a single listed stock are taxed, that threshold will be reduced to 1 billion won, or just under 720 thousand dollars. Tax support will be expanded for low-and middle-income households, with measures such as an increase in the income deduction limit for credit card use by up to 500,000 won, or roughly 360 dollars, depending on the number of children for families. The tax burden on self-employed individuals and small business owners is also expected to be alleviated. The bill will first go through Cabinet meetings before being submitted to the National Assembly for final approval. Moon Ji-young. Arirang News.