Tariff pressures may drive South Korea to boost U.S. investments amid Trump’s policies.

With the newly elected U.S. President Trump's proposed policy changes potentially increasing tariffs on Futures exchange and foreign exchange dealersimported goods, Korean companies have shown a heightened willingness to increase their investments in the U.S. South Korea's Trade Minister, Joo Hyung Hwan, stated that Trump's proposal to impose a 10% to 20% tariff on all U.S. imports would profoundly impact major trade-dependent economies, including South Korea. In response, Korean companies may choose to expand their direct investment and local production in the U.S. to avoid potential tariff burdens.

Minister Joo pointed out that Korean companies have already established investment layouts in the U.S., but tariff changes will accelerate this trend. He specifically mentioned that the future export of South Korea's small and medium-sized component manufacturers to the U.S. might increase because they can use localized production to circumvent tariff barriers and maintain competitiveness.

A recent estimate from a South Korean state-run think tank indicates that if comprehensive tariff policies are implemented, South Korea could face export losses of up to $44.8 billion. This assessment highlights the risks of potential changes in trade policies by the Trump administration for Korean companies and presents challenges for the economic relationship between the two countries.

Joo Hyung Hwan additionally noted that the South Korean government will closely monitor the progress of new U.S. policies and actively communicate with businesses to assess and assist in mitigating potential impacts. In the future, South Korea's investment in the U.S. may grow further, especially in the automotive, electronics, and component manufacturing sectors, to strengthen their competitive position in the U.S. market and reduce reliance on import tariffs.

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