Shipbuilding key to US-Korea tariff talks, last week to negotiate the deal

Seoul [South Korea], July 28 (ANI): As the deadline for US-Korea trade negotiations approaches on August 1, Seoul is making all efforts to finalise a tariff agreement with Washington, reports Korea Herald.

Finance Minister of Korea, Koo Yun-cheol, is scheduled to meet US Treasury Secretary Scott Bessent on Thursday, to prevent a looming 25 per cent tariff on Korean exports, to be imposed from August 1, in the absence of a deal, particularly on automobiles.

The high-level meeting was rescheduled from Friday and will likely take place at the US Treasury Department. Initially, Trade Minister Yeo Han-koo and US Trade Representative Jamieson Greer were expected to meet, but the US requested a delay, according to reports in the Korea Herald.

South Korean trade officials, currently in the US, continue last-ditch negotiations. They've proposed deeper cooperation in major manufacturing sectors, namely, semiconductors, shipbuilding, and batteries, while advocating for lower tariffs on key exports like vehicles. A revised Korean proposal also includes concessions on agricultural and livestock products, though Washington is reportedly pushing for more.

The US has talks scheduled with the EU on Sunday and China early next week, leaving only two days, Wednesday and Thursday, for final negotiations with Korea.

Japan recently secured a deal to reduce US auto tariffs from 27.5 per cent to 15 per cent by offering a USD 550 billion investment package. That agreement has intensified pressure on Korea, which is now considering a USD 100 billion offer with additional incentives to stay competitive.

Since the US is focused on revitalising its manufacturing base, Seoul is emphasising collaboration in shipbuilding--an area where Korea has global leadership. According to the Korean presidential office, both sides have acknowledged strong US interest in this sector and have agreed to pursue bilateral cooperation.

President Trump has prioritised boosting the US shipbuilding industry and signed an executive order in April to reduce dependence on China in the maritime domain.

Experts warn that if the US imposes the full 25 per cent tariff, it could significantly harm Korea's manufacturing-heavy economy. Manufacturing contributes 27.6 per cent to Korea's GDP, much higher than the OECD average, and exports account for 44 per cent of its economic output.

Already, Korean automakers are feeling the impact. Hyundai and Kia saw sharp declines in their April-June operating profits, 15.8 per cent for Hyundai and 24.1 per cent for Kia.

The Korea Institute for International Economic Policy has estimated that these tariffs could reduce Korea's real GDP by up to 0.4 per cent. If the US enforces the 25 per cent tariff while Japan enjoys a lower rate, Korea's economic competitiveness will further decline, given their similar export profiles.

The Bank of Korea recently maintained its growth forecast at 0.8 per cent, assuming tariffs drop to Japan's 15 per cent level. However, if the 25 per cent tariff is applied, growth could slow to zero. (ANI)