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Trump urged to stop hurling tariff bombs at allies
By Yoon Ja-young
President Moon Jae-in promised Monday to come up with strong countermeasures against a series of U.S. tariffs, including a move to levy heavy duties on Korean steel products, such as taking the issue to the World Trade Organization (WTO).
"We should sternly cope with irrational trade protectionist measures, including taking the issue to the WTO and examining whether they violate the Korea-U.S. free trade agreement (KORUS FTA)," President Moon said at the meeting with the top aides.
Experts point out that the United States is sacrificing long-time ally Korea for political motivations, adding it will likely demolish the international trade order and rebound to hurt the U.S. economy.
"The U.S. needs to import steel. Levying heavy tariffs will pull up prices, damaging U.S. businesses that have been using imported steel," said Bae Chan-kwon, head of the trade and investment policy team at the Korea Institute for International Economic Policy.
He said the Trump administration is only using political motivations without considering any economic analysis.
"The safeguard measures on imported washers also stirred controversy within the United States, criticism that it is sacrificing consumers to protect a certain company."
The U.S. Department of Commerce recommended Friday that the administration should restrict imports of steel and aluminum products, following an investigation based on the 1962 Trade Expansion Act.
As it determined that the steel imports "threaten U.S. national security," President Donald Trump can impose high tariffs or restrict imports without congressional approval.
He has three options, which are quotas on imports; a 24 percent duty on steel imports from all countries; or levying a 53 percent tariff on imports from 12 countries, including Korea. Trump has to make a decision by April 11.
The announcement came as a shock especially for Korea since it was the only U.S. traditional ally to be included on the list of 12 countries. Canada, which is the biggest steel exporter to the U.S., as well as Japan, Germany and Taiwan were excluded.
Korea exported 3.65 million tons of steel to the U.S. last year, which is a 42 percent increase from 2011. Germany was excluded despite a 40 percent increase in exports during the same period, and so was Taiwan though its shipments have more than doubled.
An official at Korea's trade ministry said that the U.S. seems to be focusing on the fact that Korea is importing large quantities of steel from China. Some of this is reprocessed by companies here and then exported to the U.S.
Even so, the U.S. is failing to present rational criteria for its decision. Kim Soo-dong, a research fellow at the Korea Institute for Industrial Economics and Trade, said relations between the U.S. and Korea will sour and not only just from the economic perspective.
"The negative impact on Koreans' sentiment is also worrisome," he said, also adding that it will damage all international trade.
"If the U.S. executes its planned tariff bombs, the damaged countries will immediately take action. China is already mentioning diverse scenarios, and other countries will also consider their options to fire back."
China's commerce ministry warned that it will definitely take necessary measures if the final decision from the U.S. hurts its interests. Restricting imports of soybeans is considered one option for China, which purchases one third of the entire U.S. production. This will hurt farmers in U.S. states in the Midwest, one of Trump's main support groups.
Experts say that Korea should take measures jointly with other countries as well as groups within the U.S. who oppose the plan. The trade ministry said in a statement that it will reach out to such groups and ask for their assistance.
