[Yonhap News Photo]
SEOUL -- The possibility of the United States imposing new tariffs on imported cars is fueling worries among South Korean automakers already grappling with weak demand in the key export market and intensifying competition, industry watchers here said Thursday.
U.S. President Donald Trump on Wednesday announced his plan to launch an investigation into possible tariffs on imported vehicles and auto parts based on national security grounds. A similar investigation launched under Section 232 last year resulted in a 25 percent tariff on imported steel, although in many cases Washington has not slapped hefty duties and settled for a quota system.
Though the target and scope of the investigation haven't been revealed, Korean automakers expressed concerns that the Trump administration's move could add uncertainties to the market in the short term.
The latest move is another headache for the local auto industry after Seoul largely accepted U.S. demands for greater access to its auto market in a recently revised free trade agreement (FTA) between the two nations. The Ministry of Trade, Industry and Energy convened a meeting with representatives from carmakers, including Hyundai Motor Co., Kia Motor Inc. and GM Korea Co., to discuss how the fresh investigation could affect the local industry.
"We are figuring out the details of the investigation of the car duties but have not yet received any notice from Washington," a senior ministry official said on condition of anonymity. "We will be able to better grasp the potential impact on the local automotive industry after the U.S. government provides more information on the direction of its investigation."
While Korean-made autos are exempted from U.S. duties under the bilateral trade pact implemented in 2012, market watchers say new tariffs imposed under Section 232 could deal a heavy blow to the local manufacturers and parts makers. "If the U.S. imposes tariffs on (Korean autos), it would add pressure on local carmakers to increase production in American factories in the long term," a local carmaker official said.
As it takes time for the U.S. Commerce Department to conduct an investigation into foreign cars, experts say the government and industry officials should work together to avoid the import restrictions. "Looking at the steel case, it took about one year after launching an investigation and Trump signing an executive order on the tariffs," said Lee Sang-ho, a researcher at the Korea Economic Research Institute. "The local auto industry will have to fully prepare to make it clear that Korean autos do not pose a threat to America's national security.
Out of 2.53 million Korean vehicles sold abroad, about 33 percent were shipped to the U.S. last year, according to the data compiled by the Korea Automobile Manufacturers Association. South Korea exported 178,980 vehicles to the key export market in the first quarter of 2018, down 22 percent from a year earlier.
(Yonhap)
reporter
Lim Chang-won
cwlim34@ajunews.com
