By Jihoon Lee and Heekyong Yang
SEOUL (Reuters) -South Korea’s commerce minister mentioned on Wednesday he noticed home firms investing extra in the USA if the subsequent U.S. administration introduces greater tariffs.
He made his feedback simply hours after Republican Donald Trump’s victory within the 2024 presidential contest.
“If tariffs get raised, the primary different corporations can contemplate shall be elevating direct funding and on-site manufacturing,” Commerce Minister Cheong In-kyo mentioned in an interview with Reuters.
“There are ongoing investments already, and there’s a risk that funding may speed up, adopted by a rise in U.S.-bound exports by small and medium-sized components producers,” Cheong mentioned.
In recent times, South Korean firms have invested in the USA essentially the most for manufacturing of cars, particularly electrical autos, Cheong mentioned.
Trump has floated the concept of imposing blanket tariffs of 10% to twenty% on all U.S. imports, which a South Korean state-run suppose tank estimated final week would trigger the trade-dependent economic system to lose as a lot as $44.8 billion in exports.
South Korean firms’ funding within the U.S. amounted to $27 billion final yr, about 44% of the general funding by Korean corporations abroad, commerce knowledge confirmed. That share is the best since 1998, the Korea Commerce Funding Affiliation mentioned in Could.
Cheong mentioned the commerce ministry has ready methods to answer a number of eventualities and it’ll seek the advice of with the subsequent administration after channels for dialogue are arrange.
“Nonetheless, relations between South Korea and the USA is not going to be vastly affected even when the present scenario stays unchanged,” Cheong mentioned.
“We are able to solely reply to the brand new administration’s coverage. Nonetheless, we are going to make efforts for commerce to stay clean, with not solely the USA, but additionally China,” Cheong mentioned, including that the Chinese language market was “a very powerful”.
South Korea’s export development weakened in October to a seven-month low, lacking market expectations, after Asia’s fourth-largest economic system barely grew within the third quarter on slowing exports.
Final month, shipments to the USA grew 3.4%, the slowest tempo since August 2023, whereas exports to China jumped 10.9% and hit a 25-month excessive when it comes to worth.
Cheong mentioned this yr’s exports have been nonetheless anticipated to exceed final yr’s and vowed response measures to components elevating uncertainty over subsequent yr’s commerce situations, together with political occasions.
South Korea’s commerce surplus with the USA hit a report $44.4 billion in 2023, greater than with every other nation, with exports of automobiles accounting for practically 30% of whole U.S.-bound shipments.
Shares of South Korean battery and auto-makers, together with Hyundai Motor (OTC:) and LG Vitality Resolution (KS:), dropped on Wednesday, with analysts attributing the declines to worries about potential tariffs.
