Korea might dodge tariff bulletKorea may be one of the countries spared new tariffs on cars imported into the United States.
In a Bloomberg TV interview aired on Sunday, U.S. Commerce Secretary Wilbur Ross said the Trump administration has held “good conversations” with Europe, Japan and Korea.
“Those are major auto-producing sectors. Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect. It may not even be necessary to put it partly in effect,” Ross said during the interview, referencing the section of the U.S. law that allows for targeted market protections.
The White House has until Nov. 13 to determine whether to impose tariffs on imported cars.
No tariffs have been imposed on Korean passenger cars since the free trade agreement between Korea and the United States was ratified in 2011.
However, a 25 percent tariff on Korean pickup trucks imported into the United States, which was to be lifted in 2021, was extended for another 20 years until 2041 during a renegotiation last year.
The Korean government has been trying to convince the United States not to impose tariffs on Korean imported vehicles since U.S. President Donald Trump raised the possibility of using section 232 of the U.S. Trade Expansion Act of 1962, which allows the U.S. government to impose tariffs against imported goods that are considered to “threaten” or “impair” national security.
Korean Trade Minister Yoo Myung-hee during her visit to Washington on Oct. 22 met with Robert Lighthizer, U.S. trade representative, and Larry Kudlow, White House chief economic adviser, to discuss the issue.
According to the Korean Trade Ministry, Minister Yoo told her counterparts that the tariffs should not be imposed in consideration of the successful free trade agreement between the two countries as well as cooperative trade and investment exchanges.
Although there has been speculation that the decision the Korean government made last month to end its emerging market status was made in exchange for Washington abandoning the push for 25 percent tariffs, the Korean government denied this.
Hyundai Motor last month announced it was investing in Netradyne, a San Diego-based advanced driver assistance system developer. In September, the Korean automaker announced a $2 billion investment in a joint venture with a U.S. mobility company.
On average, Korea exports 850,000 vehicles to the United States a year. Last year, the it exported roughly 810,000 vehicles, which is one-third of all Korean cars exported.
Hyundai Motor and Kia Motors together exported 600,000 units to the United States last year. That’s nearly half of the 1.27 million units that it sold in the United States. The two companies have manufacturing plants in the country.
GM Korea exported 160,000 units to the United States, while Renault Samsung Motors exported 110,000.
Hana Institute of Finance estimated that if the U.S. government imposes a 25 percent tariff, Korean car prices in the United States will rise between 9.9 percent and 12 percent.
BY LEE HO-JEONG [email@example.com]