Trump tariffs portend more economic troubles for South Korea and Japan

At the first “Tariff Letters” party sent to trade partners, US President Donald Trump targeted two of the closest US allies in Asia: Japan and South Korea – both carry the burden of current tasks in automatic and steel exports.

Additional tariffs will harm this export -dependent economy, which is struggling with slowing growth, Japan is probably looking at a technical stagnation or two straight economic contractions.

Both Japan and South Korea saw the first quarter gross domestic product agreement on a quarter basis.

Imports to South Korea face 25% tariffs as Trump promised in April, while the rate in Japan rose to 25%.

Export – Including Services – Almost made 22% of Japan’s GDP in 2023According to the latest data in the World Bank and 44% of South Korean GDP in 2023.

Currently, imports of automobiles and automobile parts to the United States are 25% tariff, steel and aluminum attract 50% tax in most countries.

Cars are the biggest export of Japan to the United States and are also among the best exports of South Korea. South Korea Fourth Grand Steel Exporter to the USA According to the International Trade Administration under the US Commercial Department, in 2024.

Japanese Prime Minister Shigeru Ishiba reported The country “actively protects Japan’s national interests, looking for a chance of agreement that benefits both countries.” In May, Ishiba said His country will not accept an agreement that does not see the removal of automobile tariffs.

According to Japan economist Norihiro Yamugchi at Oxford Economics, newly announced tariffs will decrease 0.1 percent of Japan’s GDP.

“The economy already suffers from high tariffs in auto and high global trade policy and also weak consumption, the effect is not rejected,” he said.

Yamugchi said that in the second half of the Japan economy in the second half of 2025 and in the first half of 2026, he would “barely grow”, even if he did not fall into a stagnation.

The US is the largest export market in Japan. 21.3 trillion yen (145.76 billion dollars) shipping To the country in 2024, South Korea exported $ 127.8 billion worth of goods to the USA In the same year and the US as the second largest export market.

Reflecting “a more intensive tariff policy stance”, Korean Bank in May GDP growth forecasts are 0.8% to 0.8% for 2025 according to 1.5% projection of February.

“The healing in domestic demand is delayed, export growth is expected to slow down due to the effect of US tariffs.” He said.

HSBC Chief Asian economist Frederic Neumann told CNBC that Japan and South Korea should not reach an agreement, these tariffs will form “big winds to grow”.

Both Japan and South Korea are currently facing sluggish domestic demands.

Offering a silver primer, Trump said that if the countries are going to open their “closed” markets to the United States, they are willing to “perhaps think of a harmony to this letter”

Mizuho Securities General Manager Vishnu Varathan, South Korea and Japan are brought to the tactics of pressure.

“The disappointment of Japan’s more principle and holistic approach (including sectoral tariffs) stops an agreement, which is a source of disappointment for US trade negotiators, and most importantly speaks for Trump.” Added.

Although Trump does not express his anger against South Korea clearly, Varathan said, “It is unimaginable to have a similar adhesion points to Japan, so that it calls the letter.” He said.

In the meantime, the markets seem to be shrinking with tariff threats for now. Neumann from HSBC said Trump’s letters Essentially, the deadline for tariff negotiations is three weeks.

“Financial markets, threatening tariffs still focus on the possibility of a decrease through negotiation,” he takes the latest news in their steps. ” He said.