Domestic mid-sized enterprises expressed concerns about the decline in export competitiveness due to the 15% reciprocal tariff set by the United States.
The Federation of Middle Market Enterprises of Korea (FOMEK) announced the results of its "Impact Future Survey on the Korea-U.S. Reciprocal Tariff Negotiation" on the 22nd, stating that "32.9% of mid-sized enterprises are concerned about the decline in export competitiveness due to the U.S. reciprocal tariff." FOMEK also emphasized that "urgent measures are needed to alleviate the increasing trade pressure from the U.S., which has undermined the tariff-free status established under the Korea-U.S. Free Trade Agreement (FTA) with the introduction of reciprocal tariffs and the recent increase of tariffs on steel and aluminum derivative products to 50% under Section 232 of the Trade Expansion Act."
Mid-sized business leaders noted that regarding the outcome of the government's reciprocal tariff negotiations, they found it "positive in terms of resolving uncertainty (23.6%)" and that it is "an inevitable situation despite certain losses (36.6%)." The evaluation stating that "the negative impacts outweigh the positives" was 21.1%.
This survey was conducted from July 31 to August 11, targeting 123 major export mid-sized enterprises.
21.1% of mid-sized enterprises responded that if the U.S. export tariff is 15% or below, they can ensure profitability, but 25.2% and 41.5% of mid-sized enterprises indicated that tariffs would have to be reduced below 10% and 5%, respectively, to achieve profitability.
A FOMEK official stated, "Considering that the average operating profit margin of the surveyed mid-sized enterprises is only 4.5% for 2023, proactive government support to minimize the impact of unexpected reciprocal tariffs, as well as corporate self-efforts, is urgently needed to prevent damage to competitiveness from investment and employment contraction."
Mid-sized enterprises need to strengthen government support to resolve trade and commerce difficulties arising from the imposition of U.S. reciprocal tariffs, responding that "expansion of export financing and tax support (52.8%)", "manuals for responding to U.S. customs and import procedures and expert matching (16.3%)", and "remedial measures for affected industries based on negotiation results (11.4%)" are necessary.
Mid-sized enterprises emphasized the need to prevent the expansion of reciprocal and item-specific tariffs through future negotiations with the United States by insisting on "tariff reductions on key export items such as semiconductors", "minimizing the scope of tariff increases", "expanding items to maintain a zero tariff", and "resolving uncertainties through tariff stabilization."
Lee Ho-jun, vice president of FOMEK, stated, "Although unilateral measures that violate global trade norms continue, the reciprocal trade relationship with the United States, which accounts for about 16.6% of mid-sized enterprise exports and is the second-largest export country, is an essential condition for enhancing the competitiveness of our industries, including mid-sized enterprises." He added, "It is necessary to eliminate trade and commerce uncertainties during the upcoming Korea-U.S. summit meeting on the 25th and establish a long-term close cooperation system between the two countries."