The logo of Chinese car manufacturer BYD is on display at the Essen Motor Show in Germany, Dec. 4. AFP-Yonhap

Korea is unlikely to impose countervailing duties on Chinese electric vehicles (EV) amid fears of possible trade retaliation from the world's second-largest economy, experts and industry officials said Monday.

This contrasts sharply with the positions of the United States and the European Union (EU), both of which are moving to raise tariffs on Chinese EV imports. Starting in September, the U.S. quadrupled its tariff on China-made EVs to 100 percent, while the EU decided to impose an increased tariff of up to 45.3 percent on EVs imported from China.

Korea's Ministry of Trade, Industry and Energy is also weighing the option of imposing similar duties on Chinese EVs, as BYD plans to start selling its vehicles in Korea in January 2025. The ministry stated that it has developed a detailed guideline outlining the legal foundation for potential sanctions on Chinese imported goods.

However, Korea's saber-rattling is unlikely to materialize due to the trade-reliant structure of its economy, according to industry insiders.

"Korea will not be able to play the card in the end, as the economy is still heavily reliant on China," Lee Ho-geun, an automotive engineering professor at Daedeok University, said. "This means Korea remains highly vulnerable to any possible trade retaliation from China."

Automobiles for export are parked at a yard in the southeastern city of Ulsan in this undated file photo. Newsis

In response, China is also intensifying its rhetoric against Korea's potential sanctions on Chinese EV imports. State-controlled media in China argued that such regulations will ultimately harm the interests of Korean companies and citizens.

The professor also noted a slim chance of Korea imposing tariffs or regulatory pressure on BYD or other China-made EVs, citing the country's current political circumstances.

"The main opposition Democratic Party of Korea prefers to adopt a pro-China policy drive, so it will be tough for the government to push ahead with the move," Lee said.

Data from the Korea International Trade Association shows that in 2023, Korea's export dependence on China reached 19.7 percent, making it the highest in the world. Meanwhile, Korea's dependence on the U.S. was recorded at 18.3 percent during the same period.

Industry officials said Korea cannot follow a similar path to that of the U.S. or the EU when it comes to China regulations, as the Korean economy has much more to lose under such a scenario.

"Even if the move is a step in the right direction amid the global rise of protectionism in the wake of the second Donald Trump presidency, the Korean economy is vulnerable to external variables due to the trade reliance," an automotive industry official said.

According to the official, Hyundai Motor and Kia — two major Korean carmakers — would face significant risks from China's retaliation if the Korean government imposes punitive sanctions on Chinese EVs.

"The two carmakers are moving to redirect their strategic focus on China by recently making mega-sized investments there, but their fate will be clouded once again if both countries engage in any unnecessary trade conflict," the official said.