On November 6, South Korean Trade Minister Cheong In-kyo said he expects local Korean companies to invest more in the U.S. if the next U.S. administration raises tariffs on imported products.
If the U.S. adopts protectionist measures, the South Korean government will engage in trade diplomacy, while individual companies may move faster, Cheong In-kyo said.
Asked how the next U.S. President Trump’s trade and tariff policies will affect the Korean auto industry, Cheong In-kyo said: “If U.S. import tariffs are raised, the first alternative that Korean automakers can consider will be to increase direct investment and local production activities in the United States.” Cheong In-kyo added: “The Korean auto industry is currently investing in the United States, and the pace of investment is likely to accelerate in the future, followed by an increase in exports to the United States by small and medium-sized auto parts manufacturers.”
Trump had proposed a comprehensive tariff of 10% to 20% on all products imported into the United States. Last week, a South Korean state-owned think tank estimated that this would cost South Korea up to $44.8 billion in export business.
Trump has also proposed a 200% tariff on some imported cars, a move that could affect several Asian automakers including Honda Motor, Nissan Motor and Hyundai Motor.
Higher U.S. import tariffs would be a blow to South Korea’s big exporters, especially its automakers, which rely more on South Korean production for exports than their Japanese rivals who sell cars in the United States.
Last year, South Korean companies invested a total of $27 billion in the United States, accounting for about 44% of their total overseas investment, trade data show. In May, the Korea Trade-Investment Association said the proportion was the highest since 1998.