South Korea’s “Korean Daily” reported on the 18th that as the United States decided to impose additional tariffs on Chinese products worth 50 billion U.S. dollars, the Chinese government immediately issued countermeasures with the same scale and the same intensity. The trade frictions of the world's first and second largest economic powers may spread to countries like the European Union and Japan like dominoes, which means that the global trade war may be approaching. The South Korean economy, which has been suffering from the "four hardships," such as production, investment, consumption, and employment deterioration, has finally been seriously affected by its export as a straw. Some analysts believe that the Korean economy is highly dependent on the international market. Once the global trade war begins, South Korea may become the biggest victim.
According to reports, South Korea is currently ranked as the sixth largest exporting country in the world, and its foreign trade structure has a high degree of dependence on China and the United States. According to the data, China and the United States are the first and second largest trading partners in South Korea. Exports to China account for 25% of South Korea's total exports, and exports to the United States account for 12%. According to projections from the Korea Industrial Research Institute, if China and the United States increase tariffs on each other’s $50 billion in goods, South Korea’s exports to China will be reduced by US$110 million, and exports to the United States will be reduced by US$0.9 billion. The research report of the Korea Modern Economic Research Institute believes that if the Sino-U.S. trade war is fully launched, South Korea’s exports to China may be reduced by up to US$ 28.26 billion, accounting for about 20% of South Korea’s annual exports to China.
The potential power of the Korean economy is now near the bottom. According to the latest report from Korea Development Research Institute, South Korea’s unemployment rate in May this year was 4%, a record high since 2000. It is expected that economic indicators such as consumption, investment, and production will all stagnate or worsen in the second half of this year.
The Korea Trade Association believes that once the Sino-U.S. trade war starts, South Korea’s parts and components and other intermediate products will be seriously damaged. Last year, Korea’s exports to China accounted for 142.1 billion U.S. dollars, with intermediate products accounting for 78.9%. In particular, the Korean semiconductor industry will become the “shrimp in the whale battle.” The list of products that the United States is preparing to increase its tax revenue to China includes memory semiconductors such as Samsung Electronics and SK Hynix in China. According to Cui Yuanmu, a professor at Korea’s Ewha Woman’s University, it cannot be underestimated the impact of the Sino-US trade war, and it is necessary for South Korea to actively respond to unfair tariff barriers through multilateral mechanisms such as the WTO.