Washington, April 3 (IANS) US President Donald Trump’s announcement on “reciprocal” tariffs appears to have put South Korea deeper into a soul-searching mode over its growing reliance on the United States for trade, as the protectionist move further jeopardised the fate of a bilateral free trade agreement (FTA).
Trump announced a 10 percent “baseline” tariff on imports from all trading partners and “reciprocal” tariffs, including 26 percent duties for South Korea — a culmination of his drive to curtail America’s trade deficits, boost revenue, attract foreign investments and strengthen domestic manufacturing.
The baseline and reciprocal tariffs are set to go into effect Saturday and next Wednesday, respectively, as Trump has repeated his vow to rectify what he called “unfair” foreign trade practices that have “ripped off” America for too long, reports Yonhap news agency.
For South Korea’s export-reliant economy, new U.S. duties, including planned 25 percent tariffs on imported cars and parts, are raising the nettlesome questions about how to rebalance the trade relationship with the United States potentially under a new deal and avoid unforeseen consequences of economic interdependence.
The tariff announcement also added to uncertainties over the future of the increasingly multifaceted South Korea-U.S. relationship at a time when Seoul has been in a period of political flux caused by President Yoon Suk Yeol’s short-lived martial law imposition and his impeachment in December.
With a chart showing individualised reciprocal tariffs at a White House event, Trump depicted the new duties as “kind” and “common sense,” claiming the U.S. will impose just half the rate each targeted country was supposed to pay.
An annex to the executive order on the White House website showed 34 percent reciprocal tariffs for China, 20 percent for the European Union, 46 percent for Vietnam, 32 percent for Taiwan, 24 percent for Japan, 27 percent for India, 37 percent for Thailand, 32 percent for Switzerland, 32 percent for Indonesia, 24 percent for Malaysia and 49 percent for Cambodia.
“Our Asian FTA partners were not spared with Korea’s rate at 25 percent at the high end of the group,” Wendy Cutler, vice president of the Asia Society Policy Institute and former negotiator of the South Korea-U.S. FTA, said in a statement. The 25 percent tariff was later revised to 26 percent.
“Asian countries in particular have been hard hit, causing them sharp economic pain given their export-driven economies. While the president has underscored that he could have charged a lot more, our partners will not view his actions today as ‘kind.'”
Cutler predicted U.S. trading partners will be under domestic pressure to respond while helping their companies weather the tariff storm.
“We can expect global economic growth to start plummeting as trade flows decline, prices increase and businesses put off investments,” she said. “Foreign delegations are likely to be all over Washington trying to secure exceptions.”
Many observers warned that Trump’s tariff salvo could chip away at America’s reputation for reliability.
—IANS
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