Seoul, South Korean auto industry could likely be hard hit if the United States decides to slap 25 percent tariffs on foreign vehicles and auto parts under its Trade Expansion Act, a Korean economist said.
According to a report by the Institute for International Trade (IIT), auto exports from Asia's fourth-largest economy could plunge 22.7 per cent if Section 232 goes into force. The section is a rarely used tool that can permit US policymakers to erect emergency barriers on "national security" grounds.
The drop is greater than the 21.5 per cent decrease forecast for cars made in Japan and the 21.3 percent decline expected for vehicles assembled in China. Sales of German cars could fall 21 percent if Washington imposes the sanctions, South Korean News Agency (Yonhap) reported.
It added that if new tariffs are 100 percent transferred to the consumer price of foreign-made cars sold in the key North American country, the main beneficiaries will be US carmakers.
"If import vehicles' prices go up just 1 percent, this will translate into a 1.77 percent rise in sales for cars made in the United States," IIT predicted.
The forecast, however, said that because Japan exports more cars to the US than South Korea, that country's outbound shipments will fall by some 420,000 vis-A�-vis 160,000 for local carmakers like Hyundai Motor Co. and Kia Motors Corp.
Source: Bahrain News Agency