Gov’t scrambles over U.S.-sparked trade warsFears of trade wars sparked by U.S. President Donald Trump’s tariffs on steel and aluminum are rattling financial markets.
The Seoul primary market Kospi on Monday closed at 2,375.06, losing 27.10 points or 1.13 percent compared to Friday’s close.
Similar panic was felt in other major markets with the Japanese stock market losing 139.55 points or 0.66 percent and Hong Kong falling at a faster rate of 2.28 percent.
The Korean government organized an emergency meeting on Monday to discuss the situation.
“International trade conflict seems to be expanding and developing as risks to the global and Korean economies,” said Finance Minister Kim Dong-yeon, who held the meeting of top government officials including Foreign Minister Kang Kyung-wha, Trade, Industry and Energy Minister Baik Un-gyu and Land, Infrastructure and Transport Minister Kim Hyun-mee.
“The government will continue to explain our situation to the U.S. government while contacting the U.S. Congress, government officials and economic group,” Kim said.
He said the issue would be discussed at the Finance Ministers and Central Bank Governors G20 meeting taking place in Buenos Aires later this month.
With the White House expected to come up with details on the steel and aluminum tariffs later this week, Trump over the weekend doubled down on his decision, especially after the EU responded with a threat to raise tariffs on quintessential American products such as Harley-Davidson motorcycles and Levi’s blue jeans.
On Saturday, Trump tweeted, “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
The feud is spreading to other major American trading partners including Canada and China.
China accused the United States of ignoring World Trade Organization agreements and vowed to take steps to protect its legal rights. Canada, the largest steel exporter to the U.S., said it would take measures to protect its interests and workers.
Although Korea continues to enjoy an export boom that has lasted 16 consecutive months, last month’s growth of 4 percent was the slowest since the 2.3 percent growth reported in November 2016, raising some alarm.
In an interview on ABC News Sunday, Commerce Secretary Wilbur Ross claimed there will be no exemptions on the tariffs. “The decision is obviously his [Trump’s] but as of the moment, as far as I know, he is talking about a fairly broad brush,” Ross said.
The Korean lobbying group Federation of Korean Industries (FKI) sent a letter to U.S. congressmen and top officials in the Trump administration, requesting Korea be exempted from the new tariffs.
Analysts say the tariffs won’t have an immediate impact on Korea’s exports or economic growth, but they worry that other major economies may follow suit, leading to the collapse of a rules-based international trading order.
BY LEE HO-JEONG [firstname.lastname@example.org]