- Trump’s order lowers tariffs on Japanese car imports from 25% to 15%.
- South Korean automakers are disadvantaged since their U.S. exports still face 25% tariffs.
- Seoul and Washington are negotiating $350 billion investment commitments in American industries.
South Korea stated that an executive order by U.S. President Donald Trump aimed at executing a trade agreement with Japan, which features a reduced 15% tariff on Japanese car imports, is anticipated to affect its automotive sector.
A Seoul trade official stated that South Korea is evaluating the specifics of the trade agreement signed by Trump on Thursday. The reduced tariffs on Japanese cars will come into effect one week after the order is published.
This action would position South Korean car manufacturers at a competitive disadvantage compared to their Japanese counterparts, given that U.S. tariffs on automotive imports from South Korea stay at 25%. The 15% fee is applied retroactively to the majority of products dispatched from Aug. 7.
"We are assessing the details of the executive order and consulting with the U.S. in depth," the official stated via phone, noting that it was challenging to predict when South Korea might receive the same reduction in auto tariffs.
On July 30, Trump announced that the U.S. will impose a 15% tariff on imports from South Korea, lowered from a proposed 25%, and will decrease car import duties to 15% from 25%, in exchange for Seoul investing $350 billion in the U.S.
However, the reduction in tariffs on cars has not been executed, as South Korea and the United States continue to disagree on the specifics of the $350 billion investments in key U.S. industries promised by Seoul, despite a meeting between South Korean President Lee Jae Myung and Trump.
Last week, presidential policy adviser Kim Yong-beom mentioned that both sides were still resolving significant disagreements regarding the specifics while aiming to finalize a non-binding memorandum of understanding on the investments.
Also Read: Japan PM Ishiba Welcomes Trump's Tariff Cuts on Autos, Imports
Kim mentioned he recognized the "frustration" from Korean car manufacturers, but "we have to come up with a proposal that is acceptable to the public," stating that South Korea must also converse with parliament about the possible U.S. agreement.
"There is an implicit consensus among the government and public in Japan that there should be no confrontation with the United States. But Korea is different. Korea is a very tough country," he said.
South Korea stated that direct investment would represent a minor share of the investments, which it claimed would mainly include loans and guarantees.