US-Korea Trade Talks Spotlight Shipbuilding Sector Collaboration

The clock’s ticking! With the August 1 deadline for the US-Korea trade talks zooming closer, Seoul is pulling out all the stops to seal a tariff deal with Washington. The big showdown? Korea’s Finance Minister, Koo Yun-cheol, is gearing up to meet US Treasury Secretary Scott Bessent this Thursday. The mission? To stop a massive 25% tariff from slamming Korean exports — especially automobiles — right when summer peaks.

Originally, Korea’s Trade Minister Yeo Han-koo was set to hash things out with US Trade Representative Jamieson Greer, but the US hit the pause button, pushing the meeting back a bit. Now, the high-stakes discussion is expected to happen at the US Treasury Department instead. The pressure’s on, and both sides know the stakes: no deal means those hefty tariffs kick in, potentially rocking Korea’s export-driven economy.

Last-Ditch Negotiations and Concessions Proposed

South Korean trade officials, currently in the US, continue last-ditch negotiations. They’ve proposed deeper cooperation in major manufacturing sectors, namely, semiconductors, shipbuilding, and batteries, while advocating for lower tariffs on key exports like vehicles. A revised Korean proposal also includes concessions on agricultural and livestock products, though Washington is reportedly pushing for more.

Limited Time For Final Talks

The US has talks scheduled with the EU on Sunday and China early next week, leaving only two days, Wednesday and Thursday, for final negotiations with Korea.

Japan recently secured a deal to reduce US auto tariffs from 27.5 per cent to 15 per cent by offering a USD 550 billion investment package. That agreement has intensified pressure on Korea, which is now considering a USD 100 billion offer with additional incentives to stay competitive.

Focus On Shipbuilding Cooperation

• The US is focused on revitalizing its manufacturing base.
• Seoul is emphasizing collaboration in shipbuilding, a sector where Korea holds global leadership.
• The Korean presidential office reports strong US interest in shipbuilding.
• Both countries have agreed to pursue bilateral cooperation in the shipbuilding sector.
• President Trump prioritizes boosting the US shipbuilding industry.
• In April, President Trump signed an executive order to reduce US dependence on China in the maritime domain.

Potential Economic Impact Of Tariffs

Experts warn that if the US imposes the full 25 per cent tariff, it could significantly harm Korea’s manufacturing-heavy economy. Manufacturing contributes 27.6 per cent to Korea’s GDP, much higher than the OECD average, and exports account for 44 per cent of its economic output.

Already, Korean automakers are feeling the impact. Hyundai and Kia saw sharp declines in their April-June operating profits, 15.8 per cent for Hyundai and 24.1 per cent for Kia.

Economic Forecasts Under Threat

The Korea Institute for International Economic Policy has estimated that these tariffs could reduce Korea’s real GDP by up to 0.4 per cent. If the US enforces the 25 per cent tariff while Japan enjoys a lower rate, Korea’s economic competitiveness will further decline, given their similar export profiles.

The Bank of Korea recently maintained its growth forecast at 0.8 per cent, assuming tariffs drop to Japan’s 15 per cent level. However, if the 25 per cent tariff is applied, growth could slow to zero.

(With Inputs From ANI)

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