By Jihoon Lee and Heekyong Yang
SEOUL (Reuters) -South Korea’s commerce minister stated on Wednesday he noticed home firms investing extra in the US if the subsequent U.S. administration introduces increased tariffs.
He made his feedback simply hours after Republican Donald Trump’s victory within the 2024 presidential contest.
“If tariffs get raised, the primary various companies can contemplate might be elevating direct funding and on-site manufacturing,” Commerce Minister Cheong In-kyo stated in an interview with Reuters.
“There are ongoing investments already, and there’s a chance that funding might speed up, adopted by a rise in U.S.-bound exports by small and medium-sized elements producers,” Cheong stated.
In recent times, South Korean firms have invested in the US essentially the most for manufacturing of cars, particularly electrical autos, Cheong stated.
Trump has floated the thought of imposing blanket tariffs of 10% to twenty% on all U.S. imports, which a South Korean state-run assume tank estimated final week would trigger the trade-dependent financial 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 companies abroad, commerce knowledge confirmed. That share is the best since 1998, the Korea Commerce Funding Affiliation stated in Could.
Cheong stated the commerce ministry has ready methods to answer a number of situations and it’ll seek the advice of with the subsequent administration after channels for dialogue are arrange.
“Nonetheless, relations between South Korea and the US is not going to be enormously affected even when the present scenario stays unchanged,” Cheong stated.
“We are able to solely reply to the brand new administration’s coverage. However, we’ll make efforts for commerce to stay clean, with not solely the US, but in addition China,” Cheong stated, including that the Chinese language market was “crucial”.
South Korea’s export development weakened in October to a seven-month low, lacking market expectations, after Asia’s fourth-largest financial system barely grew within the third quarter on slowing exports.
Final month, shipments to the US 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 stated this yr’s exports had been nonetheless anticipated to exceed final yr’s and vowed response measures to elements elevating uncertainty over subsequent yr’s commerce circumstances, together with political occasions.
South Korea’s commerce surplus with the US hit a file $44.4 billion in 2023, larger than with some other nation, with exports of vehicles accounting for almost 30% of whole U.S.-bound shipments.
Shares of South Korean battery and auto-makers, together with Hyundai Motor (OTC:) and LG Power Resolution (KS:), dropped on Wednesday, with analysts attributing the declines to worries about potential tariffs.
