Shares of South Korean carmakers Hyundai and Kia briefly fell by several percent today, while the won weakened against the US dollar, Reuters reported.
Market reaction to Trump’s announcement
The move follows a statement made on Monday by US President Donald Trump on his social media platform, saying that import tariffs on, among other things, South Korean automobiles, timber and pharmaceuticals would be raised to 25 percent from an unspecified date because Seoul has not yet approved a trade agreement with the United States. South Korea has not yet been officially informed of the plan to increase tariffs.
Trump justified the latest tariffs by referring to an agreement that both countries announced on July 30 last year and confirmed on October 29 during his visit to Korea. According to Trump, the South Korean parliament has failed to comply with the agreement, prompting him to raise import tariffs not only on the three mentioned sectors but also all other so-called reciprocal tariffs from 15 to 25 percent.
Impact on stocks, currency and next steps
Following Trump’s announcement, shares of Hyundai Motor fell by 4.8 percent and those of its subsidiary Kia by six percent, before recovering to trade 0.4 percent higher and 1.2 percent lower, respectively. South Korea’s benchmark Kospi index initially dropped by 1.19 percent but later closed 1.3 percent higher. The won, however, weakened by half a percent against the dollar. Exports of automobiles to the United States reached $30.2 billion (CZK 616 billion) last year, accounting for 25 percent of total shipments to the US, Reuters added.
The United States has not yet officially notified South Korea of the tariff increase, the South Korean presidential office said. South Korean Industry Minister Kim Jung-kwan, who is currently visiting Canada, is expected to travel to the United States soon, where he will meet US Commerce Secretary Howard Lutnick. Trump’s announcement will also be debated in Seoul, where the ruling Democratic Party (DP) said, according to Reuters, that it wants to pass a special law on the trade agreement with the United States in parliament by the end of February.
Source: ČTK
