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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL – South Korea has averted a potential ₩9 trillion blow to its economy after reaching a tariff agreement with the United States, easing trade tensions and boosting growth outlooks.
Under the deal announced July 31, U.S. President Donald Trump agreed to lower the planned reciprocal tariff on Korean goods from 25% to 15%, effective August 1, in exchange for ₩350 billion (USD 35 billion) in Korean investments in the U.S. The agreement mirrors terms previously reached with Japan, significantly reducing export-related uncertainty that had weighed on markets.
The Korea Institute for International Economic Policy (KIEP) had warned that a 25% tariff could cut real GDP by 0.3–0.4%, or as much as ₩9.2 trillion, based on last year’s real GDP of ₩2,292.2 trillion.
Analysts say the lower 15% tariff removes much of that downside pressure. Combined with a modest domestic consumption recovery and continued export strength through Q2, the resolution could lift Korea’s annual growth rate beyond earlier projections that hovered near zero.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
