6 in 10 Korean manufacturers say US tariffs will impact their biz, survey shows

Six out of 10 Korean manufacturers expect the tightening U.S. tariffs to have direct or indirect impacts on their businesses, a survey showed Tuesday.

Nearly half of them said they are still "monitoring developments," even as the U.S. prepares to announce reciprocal taxes on Wednesday.

According to the poll by the Korea Chamber of Commerce and Industry (KCCI), 60.3 percent of 2,107 manufacturers across the country said they are under the impact of new U.S. tariffs. The poll surveyed companies from Feb. 21 to March 7.

Among the respondents, 46.3 percent said they are facing indirect impacts, while 14 percent said they will be directly affected by the tariffs.

Among the Donald Trump administration’s tariff measures announced so far, three are expected to pose direct impacts on the Korean economy. The United States has been imposing a 25 percent tariff on steel since March 12 and will slap a 25 percent tariff on fully assembled vehicles manufactured outside the U.S. beginning Thursday. On Wednesday, the administration is set to announce reciprocal tariffs against U.S. trading partners, meaning automobiles and steel may face not only the 25 percent duty but also additional reciprocal tariffs.

The survey showed that 84.6 percent of battery-related companies and 81.3 percent of automobile and auto component companies said they will be affected by the tariffs.

The automobile industry is expected to be among the most affected sectors, with the U.S. accounting for 46 percent of Korea’s total car exports last year. Including shipments from Korean brands’ overseas production bases, such as Mexico, the KCCI estimates suggest that between 700,000 and 900,000 vehicles could be impacted.

Containers are piled at Busan Port, Tuesday. Yonhap

Along with battery and automobile makers, more than 65 percent of companies in sectors such as semiconductors, medical precision equipment, electrical equipment, machinery and electronics and telecommunications said they expect to be affected, reflecting growing concern over the incoming reciprocal tariffs.

Despite the looming duties, 45.5 percent of surveyed companies said they are still “monitoring developments,” and 20.8 percent said they have no countermeasures.

Those who said they are seeking their own countermeasures, such as reducing production costs, accounted for 29 percent, while only 3.9 percent of the respondents said they will come up with measures to avoid the tariffs.

Compared to conglomerates and large corporations, small- and medium-sized enterprises (SMEs) appear more vulnerable to tariff risks. While 44.8 percent said they are monitoring developments, 24.2 percent responded that they have no countermeasures in place.

“Most auto components are SMEs and they can be affected by the tariffs even if they do not export directly to the U.S., because of declining demands for parts and the risk of other countries dumping their exports to Korea or emerging markets to avoid U.S. tariffs,” the KCCI said.

“Since SMEs are facing difficulties in coming up with their own response measures, the government needs to provide multi-channel supports including tax relief, export financing and measures to reduce production costs for domestic automakers to maintain output.”