South Korea’s economic system would probably undergo a contraction if Donald Trump returns to the White Home and ratchets up tariffs in opposition to buying and selling companions, in response to a government-affiliated assume tank.
Gross home product would shrink by as a lot as an estimated 0.67%, with exports lowered by $44.8 billion ought to Trump win subsequent week’s election and observe by way of together with his pledge to impose common tariffs — at a most degree, in response to the examine launched Thursday by the Korea Institute for Worldwide Financial Coverage.
Researchers investigated a complete of 18 situations with various ranges of tariffs in opposition to China and different nations, with Trump’s first time period as a key supply of supporting materials. South Korea would most likely undergo lower than China, Mexico, the European Union and Japan by way of exports to the US.
South Korea is among the many world’s most trade-reliant nations with its companies embedded broadly throughout provide chains for all the pieces from semiconductors to vehicles to petrochemicals. China is its greatest buying and selling companion, with its producers shopping for intermediate items from South Korea to be assembled into merchandise which are then shipped elsewhere, together with the US.
South Korea’s authorities officers have been getting ready contingency plans for each attainable outcomes subsequent week, as polls present an in depth race between Trump and Vice President Kamala Harris. Trump has vowed to impose tariffs of as a lot as 60% in opposition to China, and he characterised South Korea as a “cash machine” that ought to shoulder extra of the prices for the American troops it hosts.
The KIEP examine provides gloom to the outlook for South Korea’s economic system subsequent 12 months at a time when headwinds are rising on the commerce entrance. The nation’s GDP barely grew final quarter from the earlier three-month interval as exports in actual phrases fell, prompting the Financial institution of Korea to contemplate a lower to its annual progress projection.
The economic system nonetheless might develop by as a lot as 0.24% with demand for South Korean merchandise rising if the nation alone is excluded from US tariffs, the examine stated, calling {that a} low-probability state of affairs.
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