[Inside Chodong] Trump's Unreasonable Tariffs: "American Cars Aren't Selling"

On the 3rd (local time), the United States imposed a 25% tariff on imported cars. There is an immediate expectation that local car prices will rise. It is said that prices could increase by at least $5,000 (726,000 KRW) and up to $12,200 (1,790,000 KRW).

President Donald Trump's tariff policy is becoming a reality. A big picture has been drawn, including universal tariffs on imports such as steel and cars, as well as reciprocal tariffs against more than 70 countries. South Korea will also face tariffs as high as 25%. The World Trade Organization (WTO) and Free Trade Agreements (FTA) that have lasted for decades have effectively been nullified.

President Trump does not hide his intention to increase domestic production and create jobs even if it means raising prices on imported consumer goods. Even if one tries to understand this as a president prioritizing his country's interests, it remains to be seen whether the intended results will be achieved.

However, it is difficult to agree with the U.S. claim, proudly waving tariffs and blaming Korea's non-tariff barriers for the poor sales of American cars. According to the fact sheet released by the White House, "Korea is hindering market access for U.S. automobile manufacturers," pointing out that "Korea does not recognize certain standards accepted by the U.S., requires duplicate certification, and has transparency issues." But this is also hard to agree with.

To examine the U.S. claims, one should look at the Trade Barriers Report (NTE) released by the U.S. Trade Representative (USTR) last year. Regarding automobiles, the USTR specifically pointed out that regulations related to exhaust emissions are problematic. Currently, to sell cars domestically, certification for vehicle emissions and noise must be obtained from the National Institute of Environmental Research under the Ministry of Environment. The same standards apply not only to American cars but also to domestic and other foreign cars. It is not unreasonable only for the U.S.

In particular, the USTR criticized that the criteria for 'modified certification' and 'modification reporting' during the certification process are unclear and act as obstacles. However, looking into the legal provisions, this is not difficult to understand.

According to the amended Atmospheric Environment Preservation Act from July last year, 'modified certification' must be obtained if there is a 'significant modification' to a previously certified vehicle. The meaning of significant modification is specified in the Ministry of Environment notification (No. 2024-261) as "cases where emission-related parts are changed."

In other words, if emission-certified parts are replaced after certification, 'modified certification' must be obtained because emissions could increase or decrease. For other modifications, only 'modification reporting' is required. This can be confirmed in less than 10 minutes through a portal search, so it is hard to understand why leading American car companies find this difficult.

The notion that American cars do not sell well in the domestic market is also outdated. Last year, 40,879 American cars were sold domestically, marking the highest sales ever. In the first quarter, 7,278 units were sold, accounting for 12% of the total imported car market, exceeding the 2020?2023 average market share of 9.5%.

Let’s look at the perception domestic consumers have of American cars. They are criticized for rough designs, low-quality interior finishes, and lack of convenience features, and are evaluated as inferior in durability and quality compared to Japanese and German cars. Except for Tesla, there are no notable eco-friendly cars. To sell well in the Korean market, it is recommended to first offer cars that sell well.

According to the U.S. logic, how should the efforts of domestic companies that develop strategic models targeting the U.S. and conduct various promotional activities be rewarded? A strategy to wisely respond to the U.S.'s 'unreasonable claims,' which far exceed the line, is urgently needed.