Heavier tariff on Korean steel imports show Korea is ‘easy target’: experts

The US mulling imposing heavy tariffs on South Korean steel imports, ostensibly to reduce its own trade deficit with China, shows that the Trump administration has little consideration for its seven-decade alliance with South Korea when it comes to trade, experts say.

The US Commerce Department on Friday laid out a range of options for President Donald Trump to consider, including a tariff of 53 percent on steel imports from 12 countries including South Korea and China, as part of its “America First” campaign. It earlier announced plans to impose anti-dumping tariffs of up to 50 percent on large washing machines and solar cell imports from South Korea. 

South Korea is the only US ally on the list. The US allies -- Canada, Japan and Germany -- were not included, though Canada is the biggest steel exporter to the US.

Such a move by the US is nothing new, and remains in line with President Trump’s election pledge to narrow the US trade deficit with other countries, particularly China, according to Choi Kang, vice president of the Asan Institute for Policy Studies in Seoul.

“It is a warning to China and South Korea is stuck in the middle between the US and China,” Choi told The Korea Herald.

A trade war is likely to ensue if Trump decides to levy a tariff on Chinese steel imports: China said it would take necessary steps to protect its interests if the final decision affects it.

“I don‘t think it is an economic retaliation to tame South Korea (over its approach to North Korea), and it is unlikely that the Trump administration has a meticulous tool to do that,” he said, adding it is hard to link the proposed trade penalties to the South Korea-US alliance.

The trade friction comes at a critical time with Seoul and Washington seeking to present a united front in tackling the North Korea nuclear issue.

The two Koreas in recent weeks have seen a rare rapprochement with North Korea’s participation in the PyeongChang Winter Olympics. North Korean leader Kim Jong-un sent his sister Kim Yo-jong to the South as part of a high-level delegation to the Olympics and invited Moon to visit Pyongyang.

Conservatives and critics have expressed concerns that the US imposing heavier sanctions only on South Korea among its allies could be sign of a crack in the South Korea-US alliance stemming from their different approaches to dealing with North Korea.

“We have to make sure that signs of cracks in the security and economic alliance between South Korea and the US won‘t become larger if the security situation on the Korean Peninsula over the North Korean nuclear issue heads toward a crisis,” Rep. Kim Sung-tae, floor leader of the Liberty Korea Party, said in a party meeting.

Trade issues will not likely have an impact on South Korea-US alliance, the growing thaw in inter-Korean relations or prospects of talks between the US and North Korea, Choi said.

“The government should weigh advantages and disadvantages in every sector and sign a deal under the Trump administration,” he said.

Woo Jung-yeop, research fellow at the Sejong Institute, echoed a similar view, saying differences between South Korea and the US over their North Korea policy was not a factor.

“I think that the reason South Korea is the only ally included on the list is that South Korea is easy to deal with and it is easy for him (Trump) to make a visible result in the short term,” he said, referring to the upcoming midterm elections in the US, slated for November this year. “It would be difficult for him to wage a direct war against China without any guaranteed results.”

“Unlike in the past administrations, President Trump treats trade issues separately from security issues. He is seeking to maximize profits without considering the US’ relation with South Korea.”

In response to the US moving to levy heavy tariffs on Korean steel imports, Moon on Monday called for a two-track approach to separate trade issues from security issues, ordering the government to deal with such “unfair protectionist trade measures” in a “confident and resolute” manner.

Hong Jang-pyo, Moon‘s chief secretary for economic affairs, said Tuesday that Seoul has already launched the WTO dispute settlement process concerning the US tariffs on South Korean steel.

“South Korea should have drawn a clear line and taken stern action earlier (when it faced pressure from the US),” Choi Won-mog, a law professor at Ewha Womans University, said, calling its lack of a proper response a “strategic mistake.” “Without such a measure, South Korea has become an easy target.”

Asked why Japan, another US ally, was not included on the list, Choi said that Japan, a cornerstone of Asian security, is different from South Korea in the eye of the US.

“Japan is at the front line for the US to keep China in check,” he said. “But under the Trump administration, unlike in the past, South Korea is a beneficiary of the US-Japan alliance.”

Foreign Ministry spokesman Noh Kyu-duk told reporters during a regular briefing Tuesday that it is making “diplomatic efforts“ to solve various economic and trade issues between South Korea and the US in a “mutually beneficial way.”

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)