As the tariff war between the United States, the European Union (EU), and China intensifies, South Korean automobile and battery firms are poised to profit. South Korean firms are losing ground to China in the US and European markets, and if the US and Europe slap tariffs on Chinese companies, their situation may improve.
According to the industry on May. 24., Chinese export volume of electric vehicles last year was $34.1 billion (about 46.5 trillion won), a 70% increase over the previous year. 40% of all the exports went to the EU. Chinese EVs account for around 10% of the European EV market.
The Korea International Trade Association (KITA) reported that South Korean industries shipped $6.67306 billion (about 9.1 trillion won) in electric vehicles to Europe last year. That’s a 62.4% increase over 2022 ($4.182 billion), but barely one-fifth of China’s. Exports this year (January-April) were around $1.6 billion, a 30.2% decrease from last year.
China’s expansion in the European battery sector is likewise rapid. According to the Korea Institute for International Economic Policy (KIEP), Chinese battery makers’ stake in the European market increased to 40% last year, up from 10% in 2020. On the other hand, South Korean battery businesses’ export value to the European market has consistently fallen over the last five years. Last year, exports reached $1.476 billion (about 2.0135 trillion won), a 31% decrease from 2022 ($2.038 billion).
Against this context, it has been proposed that the EU’s decision to join the US in hiking tariffs on China might strengthen local firms’ position in these markets. Furthermore, if the EU begins an anti-dumping inquiry against Chinese battery businesses such as CATL, it may benefit Korean battery industries.
“In the short term, domestic companies could benefit from the tariff war between the U.S., EU, and China,” said Kim Woo-jong, a KITA researcher. “However, the decision to raise tariffs has not been officially made, and it will become clearer once the relevant investigations are finalized.”
