As U.S. President Donald Trump moves forward with his trade policies, his plan to implement reciprocal tariffs, which would match the tariffs that other countries charge on American imports, is set to become a reality for South Korea.
Earlier, on Feb. 4, Trump announced a 25% tariff on all imports from Mexico and Canada but granted them a one-month delay while imposing an additional 10% tariff on Chinese goods. He declared a 25% tariff on steel and aluminum imports, which would take effect on Mar. 12, and hinted that automobiles, semiconductors, and pharmaceuticals were potentially next in line.
With Trump’s universal and reciprocal tariffs taking shape one after another, global trade uncertainty is reaching new heights. Damon Pike, a trade specialist at accounting firm BDO International, told Reuters that each of the 186 members of the World Customs Organization had different duty rates and likened the complexity of these tariffs to “an artificial intelligence project.”
Experts note that the Trump administration, which is focused on reducing the massive U.S. trade deficit, will use reciprocal tariffs to pressure trading partners into making concessions. The administration is moving beyond universal tariffs, which apply a blanket rate to all countries, in favor of a more targeted approach that requires bilateral negotiations with key trade partners.
“Universal tariffs raise import prices across the board, increasing costs and placing a greater financial burden on American consumers,” said Cho Gyeong-lyeob, head of research at the Korea Economic Research Institute.
Unlike universal tariffs, reciprocal tariffs require a case-by-case comparison of each country’s tariff policies against those of the U.S. They are likely to be implemented gradually, beginning with countries that have significant trade imbalances with the U.S.
A senior White House official confirmed this approach. Trump’s senior economic advisor, Peter Navarro, told CNN on Feb. 11 that the U.S. will “review all trading partners,” starting with the countries that have the largest trade deficits with the U.S. to determine if they are engaging in unfair trade practices, and if they are, take corrective measures. The U.S. trade deficit in goods reached a record $1.2 trillion last year, surpassing the previous $1.18 trillion record in 2022.
Before reciprocal tariffs take full effect, analysts expect that countries with large trade surpluses with the U.S. will be among the first to face scrutiny. India and the European Union, both of which maintain substantial trade surpluses against the U.S. and impose significantly higher tariffs on U.S. goods, are considered likely candidates. India exports goods to the U.S. at an average tariff of 3% while imposing an average 9.5% tariff on U.S. imports.
Experts predict that the U.S. will expand its scope beyond tariffs to include non-tariff barriers such as value-added taxes (VAT) and government subsidies. For example, while the U.S. imposes a 2.5% tariff on imported BMW vehicles from the EU, the EU imposes a 10% tariff on U.S.-made Ford vehicles. Combined with a 20% VAT, the effective tax rate on U.S. cars entering the EU reaches nearly 30%.
“Given these disparities, the U.S. could justify additional reciprocal tariffs,” said Kim Soo-dong, director of the Korea Institute for Industrial Economics and Trade.
