The announcement of reciprocal tariffs by the Donald Trump administration is imminent, but specific details have not been disclosed, causing difficulties for the domestic industry in responding. The steel industry, which has been subject to a 25% tariff since 12th, is waiting only for the U.S. announcement, unable to properly determine whether the reciprocal tariff will be added to the existing tariffs.
President Trump is set to announce the reciprocal tariffs he has envisioned on the 2nd at 4 p.m. local time (5 a.m. on the 3rd in Korea) in the Rose Garden of the White House, with cabinet members present. Trump referred to this day as 'Liberation Day.'
Although the levels of tariffs to be imposed by the U.S. on individual countries remain unknown, it is widely expected that they will be determined considering the current tariff rates and non-tariff barriers faced by each country. Local media, including The New York Times, reported that a plan is under discussion to impose a uniform tax rate of 20% on all countries.
Ahead of the announcement of reciprocal tariffs, the domestic industry is experiencing a tumultuous atmosphere. A steel industry official noted, 'There are difficulties in obtaining pre-information related to the reciprocal tariffs. I believe we will only be able to respond accordingly once the announcement is made. There is a possibility of the worst-case scenario where reciprocal tariffs are added to the existing tariff rates, so there is a tense atmosphere.'
Looking at past cases, there are observations suggesting that this reciprocal tariff is likely to be added to the tariffs currently in effect. A source from the Ministry of Trade, Industry and Energy, knowledgeable about the related matters, said, 'When the U.S. announces tariffs, it tends to either add them in the form of additional tax to the existing tariffs or apply new tariffs while nullifying the effectiveness of the existing ones. Considering past cases, the former scenario has been more common,' adding, 'Tariffs on steel and aluminum were imposed based on Section 232 of the Trade Expansion Act, but it seems likely that reciprocal tariffs will be imposed under different legal grounds. In this case, reciprocal tariffs will be added to the existing tariffs.'
If the U.S. imposes a 20% reciprocal tariff on Korea, steel and aluminum exported to the U.S. will face a tariff burden of up to 45%. The completed vehicles, which will be subject to a 25% tariff starting from the 3rd, will see the tariff rate jump to 45%, significantly diminishing their competitive edge in U.S. exports. The Trump administration has previously indicated that a 25% tariff will also be imposed on automotive parts starting May 3.
According to a recent survey titled 'Impact of U.S. Tariffs on Our Manufacturing Companies' conducted by the Korea Chamber of Commerce and Industry with 2,107 manufacturers nationwide, 60.3% of the respondents said they are 'directly or indirectly affected by Trump's tariff policy.' Of those, 14.0% reported that they are 'directly affected,' while 46.3% stated that they have 'indirect effects.' Additionally, 39.1% reported that their businesses are not affected by the Trump administration's tariff policies, and 0.6% expected to benefit from ripple effects.
Despite the imminent announcement of reciprocal tariffs by the U.S., a significant number of corporations have been unable to formulate clear countermeasures. When asked about the level of response to U.S. tariff policies, 45% of the respondents indicated they are 'monitoring developments,' followed by 'seeking their own countermeasures such as reducing production costs' (29.0%) and 'having no response plan' (20.8%). Only 3.9% of the corporations are preparing fundamental solutions such as exploring local production or market diversification.
The government is also busy preparing measures ahead of the announcement of reciprocal tariffs. Acting President Han Duck-soo held a meeting with the heads of four major groups at the Prime Minister's residence in Samcheong-dong, Jongno-gu, Seoul, on the 1st, to discuss strategies to mitigate the impact of reciprocal tariffs and noted that they will communicate extensively with the U.S.
Han stated, 'I think that once the reciprocal tariffs are announced on the 3rd, policies to reduce our shock will be put into full motion.'