Distribution industry gaining momentum in U.S. exports… Considering ways to respond to ‘Trump tariffs’

With the recent election of former President Donald Trump as the 47th President of the United States, the domestic distribution and food industries are also paying close attention. As President-elect Trump has raised tariffs as his main pledge, it is expected to have a significant impact on domestic distribution companies.

According to the industry on the 12th, Trump’s second term announced a policy of imposing a universal tariff of 10-20% on all imported products to reduce the trade deficit. As universal tariffs are expected to be expanded to countries that signed the Korea-U.S. Free Trade Agreement (FTA), it is expected to be a considerable burden on domestic companies.

Korean consumer goods are currently exported to the United States tariff-free under the FTA. Samjong KPMG Economic Research Institute analyzed in a recent report, “There is a possibility that protective tariffs will be expanded to countries that have signed FTAs ​​like Korea in the future, which could put a burden on domestic food companies that focus on exporting to the United States.”

In particular, unlike companies with factories in the United States, companies that produce and export products domestically are bound to be directly affected by protective tariffs.

The Korea Institute for International Economic Policy also stated in its report ‘Analysis of the Economic Impact of U.S. Trade Policy’ that “If universal tariffs are imposed on Korea, Korea’s total exports will decrease by approximately $22.2 billion to $44.8 billion, and response to alternative demand and export conversion will be smooth.” “If this is not done, there is a risk that real GDP will decline by about 0.29 to 0.67%,” he predicted.

Large distribution companies such as Lotte and CJ are seeking to expand their global business, focusing on the United States. Lotte operates a hotel and food business in the United States along with a petrochemical business centered on Lotte Chemical, while Lotte Well Foods is accelerating its local marketing by recently carrying out a large-scale outdoor advertisement in Times Square in New York ahead of Pepero Day.

CJ is also seeking to expand its territory in the North American market thanks to the popularity of the ‘Bibigo’ brand. In 2019, it acquired Schwan’s, an American frozen food company, and secured a local distribution network by selling K-food such as dumplings, instant rice, and chicken locally. In February of this year, Bibigo introduced its new BI (Brand Identity) and announced plans to expand K-food into new territories.

CJ Foodville’s bakery brand ‘Tous Les Jours’ is also increasing the number of stores in the U.S. and expanding its overseas business in earnest. The plan is to increase the number of stores from 108 as of the end of last year to 1,000 by 2030.

People inside and outside the industry are closely watching the situation as the second Trump administration may increase tariffs on imported products based on domestic protectionism. This is because the possibility of expanding protective tariffs acts as a major variable for companies that are highly dependent on exports. There are also concerns that if protectionism is strengthened, companies without factories in the United States may fall behind in price competitiveness.

An industry official said, “As the domestic export industry is greatly influenced by the global supply chain and highly dependent on external sources, there is a need to closely monitor future situations and establish systematic response plans.”