Navigating the Affect of the US-China Tariff Warfare on Korean Industries

[비즈니스포스트] With america and China resuming their ‘tariff conflict’ and the European Union (EU) becoming a member of the fray, the trade is paying shut consideration to the influence it can have on Korea.

Some say there’s a optimistic response that halved earnings will return to home car, battery and photo voltaic vitality industries that compete with Chinese language firms. Nevertheless, since tariff obstacles in all international locations are more likely to have a unfavourable influence on home firms, the necessity to put together countermeasures will increase.

In accordance with the trade touch upon the twenty fourth, there’s a remark that some home firms will profit within the brief time period as america considerably will increase tariffs on many gadgets reminiscent of Chinese language electrical autos, batteries and photo voltaic merchandise.

Till now, the tariff on Chinese language electrical autos offered in america was 25%, however it will likely be elevated to 100%. Tariffs on semiconductors and photo voltaic cells will rise from 25% to 50%, and batteries, iron ore, and aluminum may also rise from 7.5% and 0-7.5% to 25%, respectively.

Particularly, China’s electrical automobile tariffs are anticipated to quadruple, and Korean electrical automobile exports to america are anticipated to extend additional when the tariff enhance takes impact on August 1.

America Worldwide Commerce Fee (USITC) mentioned in a latest report, “If america, the EU, Japan, and so forth. all elevate tariffs on Chinese language electrical and hybrid autos by 20%, China’s electrical automobile exports will drop by approx. 60%,” including, “Then again, US exports will lower by 13.6% %, and Korea will enhance by 10%.”

Which means that home automobile firms competing with Chinese language firms for the US and European markets can profit.

The EU can be investigating the Chinese language authorities’s unlawful subsidies for its electrical autos, and plans to resolve whether or not to impose preliminary tariffs in July primarily based on the outcomes of the investigation.

Battery firms reminiscent of LG Vitality Resolution, SK On, and Samsung SDI, and photo voltaic panel firms reminiscent of HD Hyundai Vitality Resolution and Hanwha Q CELLS, which compete with Chinese language firms, are additionally anticipated to learn.

Particularly, america is the biggest market, accounting for 96% of the $1 billion in home photo voltaic product exports in 2023, and there may be hypothesis that home firms will have the ability to rapidly change Chinese language firms.

Park Geon-young, a researcher at Kyobo Securities, mentioned, “The insurance policies of the European and US governments to examine the inflow of Chinese language photo voltaic vitality gear are anticipated to develop If Chinese language stock within the US has expired within the second half of this yr and worth competitors is slowing down, we will anticipate a restoration within the efficiency of home photo voltaic vitality firms.” “There may be,” he predicted.

▲ Hyundai Motor Firm manufacturing plant in Alabama, USA.

Nevertheless, from a long-term perspective, evaluation means that the tariff conflict between the US, the EU and China may even have an opposed impact on home firms within the tangled international provide chain.

China is contemplating briefly rising tariffs on imported autos with giant displacement engines in response to US tariff sanctions.

As well as, an anti-dumping investigation has been launched relating to polyformaldehyde copolymers (POMs) from Taiwan, america, the EU, and Japan. Polyformaldehyde copolymer is a fabric utilized in auto elements, digital and electrical merchandise, and industrial equipment.

The final evaluation is that China’s retaliatory measures can have little direct influence on home firms Nevertheless, simply as China strengthened export controls on graphite, a key uncooked materials for cathode supplies, throughout the US-China commerce conflict up to now, when extra measures apart from tariffs are taken, home firms The evaluation is that issues are sure to happen of their provide chain.

Korean battery firms at the moment import many of the uncooked supplies and supplies for secondary batteries, together with lithium oxide, cobalt sulfate, cobalt oxide, manganese sulfate, and precursors, from China. As well as, supplies anticipated to be core assets sooner or later, reminiscent of everlasting magnets and uncommon earths, are additionally extremely depending on China.

Yang Joo-young, an affiliate researcher on the Korea Institute of Industrial Economics and Commerce, mentioned, “The influence of the US-China tariff conflict on the home financial system may be very complicated and seems completely different for every trade, so it shouldn’t be neglected. Furthermore, the worldwide provide chain is unstable as a result of China is arming assets sooner or later.” “If determined, the substitute prices of home firms may enhance,” he mentioned.

In the end, the US coverage of accelerating tariffs might put strain on Korean firms.

The reason is that because the US authorities’s tariff enhance is a measure to guard home firms, home firms can also be deprived in america sooner or later.

Oh Hyun-seok, a professor of worldwide commerce at Keimyung College, mentioned, “This measure by the US authorities means that it’ll construct a big provide chain throughout the nation which can be advantageous for Korean firms for now, but when is the US. continues to strengthen its ‘protectionist’ stance, Korean firms will finally “We can also be topic to excessive tariffs,” he mentioned. Reporter Na Byeong-hyun