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| Hyundai Motor Manufacturing Alabama. Korean automakers invested more than $10 bil. in the United States, hiring over 110,000 workers. / Korea Times file |
By Yoon Ja-young
The government and the auto industry voiced opposition to the U.S. plan to levy tariffs on imported cars, stressing that Korean cars do not threaten U.S. security while contributing to the U.S. economy.
At the public hearing held at the U.S. Department of Commerce on Thursday, representatives for Korea opposed the U.S. President Donald Trump's pressure to levy 25 percent tariffs on imported cars for the sake of "national security," along with representatives from other major car exporters such as Japan and the EU as well as automobile-related industries of the United States.
Deputy trade minister Kang Sung-cheon stressed that Korea is a key ally of the United States as well as a trustworthy trade partner. He also pointed out that the U.S. interests were already reflected in the negotiation to revise Korea-U.S. Free Trade Agreement (KORUS FTA), easing safety standards and extending tariffs on pickup trucks.
"Our two countries have just reached an agreement-in-principle on the KORUS FTA amendment negotiations this March, which was focused primarily on autos. As such, we believe that Korea does not undermine or diminish in any way the national security of the United States," Kang said.
He also pointed out that the Korean automakers invested more than $10 bil. in the United States, hiring over 110,000. He stressed that Korea's main exports are compact cars and sedans that don't compete with U.S. automakers.
"Korean automakers produce core components in the United States and carry out numerous R&D projects on cutting-edge technologies across the United States," he said.
A U.S. worker for Hyundai Motor's manufacturing plant in Alabama also defended the carmaker for standing by the U.S. workers, not laying them of even during the economic recession.
"Some may view Hyundai as a foreign automaker, but I know from experience that we are an integral part of the American automotive industry," said John Hall.
"Approximately half of the vehicles we sell in the United States are made in Alabama. We export about 20 percent of the vehicles we make, and our exports have increased over the past five years, helping Alabama become the third largest auto-exporting state," he said.
Those representing the automobile related industries in the United States also strongly opposed the tariff proposal.
"New tariffs or quotas would also reduce competition and consumer choice; increase the cost of used vehicles; and raise the cost of getting vehicles serviced and repaired," said Peter Welch, president of the National Automobile Dealers Association.
According to the report by the Center for Automotive Research released at the public hearing, automobile sales in the United States will drop by 2 million annually while 714,700 jobs will disappear if a 25 percent tariff is levied on automobiles and automobile components. It also estimated the average price of new cars to rise by $4,400 from current $35,000.
Jennifer Thomas of the Alliance of Auto Manufacturers also feared that around 10 percent of jobs will disappear as tariffs on cars and components pull up prices, decreasing demand.
While the U.S. President is using the tariffs and the trade conflict as leverage for the November election, some analysts point out that it may not be effective.
"While Trump has recovered his approval rate since early this year, the approval rate fell in rust or farm belts, which were his main supporters. It implies that they are concerned that the trade war triggered by Trump will incur them economic damage," said Lee Jae-sun, an analyst at KTB Investment and Securities.
She pointed out that the intensifying trade war further damages economy of those regions, citing Tesla's plan to move the manufacturing facility to China and plunging bean prices as examples.
"Trump already failed with the tariff as a tactic for an election. He signed on steel and aluminum tariffs to win blue collar workers in Pennsylvania in March, but the election was lost."
