South Korea is also on high alert following U.S. President Donald Trump's announcement of a 'tariff war.'
On the 14th (local time), President Trump, while signing an executive order in the Oval Office at the White House, responded to reporters' questions about the schedule for imposing automobile tariffs by saying, "Probably around April 2."
Uncertainty is growing following President Trump's remarks. First, it is unclear whether this date refers to the implementation of tariffs or the announcement of the tariff imposition plan.
It is also unknown whether a uniform tariff rate will be applied to all imported cars, as was the case with the 25% tariffs on steel and aluminum, or whether tariffs will be differentiated by trading partner countries based on reciprocal tariffs.
However, trade experts predict that regardless of how President Trump decides around April 2, there is a high possibility that it will significantly impact South Korea's automobile exports to the U.S., as automobiles constitute a large portion of South Korea's exports to the U.S.
According to the U.S. Department of Commerce's Passenger Vehicles and Light Trucks new car export-import statistics, South Korea exported 1,535,616 vehicles (36.6 billion dollars, approximately 52.8 trillion won) to the U.S. in 2024. This ranks second in export volume after Mexico and third in value after Mexico and Japan.
On the other hand, last year, U.S. automobile exports to South Korea amounted to only 47,190 vehicles (2.1 billion dollars, approximately 3 trillion won). This means that the U.S. trade deficit with South Korea in the automobile sector alone approaches nearly 50 trillion won.
Considering President Trump's tendency to cite resolving the U.S. trade deficit as the primary reason for imposing tariffs, it is expected that tariffs, and quite high ones at that, will be imposed on Korean automobiles.
He has indicated that he will not exempt allies or countries with Free Trade Agreements (FTAs) from tariffs. Furthermore, since the U.S. Department of Commerce and Treasury Department plan to investigate trade conditions by April 1 and decide on 'reciprocal tariffs' by trading partner country, the U.S. government may cite various reasons for the poor performance of U.S. automobile exports to South Korea.
Moreover, specific tax systems such as value-added tax (VAT), which are imposed on consumers when purchasing automobiles in South Korea but do not exist in the U.S., could also serve as a pretext for including South Korea in the tariff imposition target.
If these factors materialize in the form of tariffs on Korean automobiles, the Korean automobile industry is expected to suffer significant damage. Until now, the Korean automobile industry has not paid tariffs on exports to the U.S. under the Korea-U.S. FTA.
Not only the automobile industry but also South Korea's overall exports are expected to face considerable damage. According to data from the Korea International Trade Association, as of the end of last year, South Korea's automobile export value was 70.789 billion dollars, of which exports to the U.S. accounted for 34.744 billion dollars.
Furthermore, since automobiles are South Korea's number one export item to the U.S. and the scale is three times that of semiconductors (10.68 billion dollars), which rank second among export items, there are concerns that tariffs will have a greater impact on automobiles than on any other item.
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