One year after the United States announced its reciprocal tariff policy, South Korea's effective tariff burden on exports to the U.S. has eased to 6th among major exporting countries. The conclusion of tariff negotiations between Korea and the U.S., together with auto tariff cuts, is assessed to have markedly improved indicators compared with the early phase of tariff imposition.

According to the Korea Chamber of Commerce and Industry on the 5th, in its report titled “Analysis of U.S. Tariff Imposition Trends on Major Countries,” South Korea's effective tariff rate on the U.S. was 8.7% in the first quarter of this year. This represents a drop of three places from the second quarter of last year, when the rate was 10.0% and Korea ranked 3rd among the top 10 exporters to the U.S. The effective tariff rate is calculated by dividing assessed tariffs by U.S. import value and reflects the duty burden companies actually feel. In the first quarter, exports from South Korea to the U.S. totaled USD 36.74 billion, with tariffs of USD 3.2 billion.

Behind the reduced tariff burden was the strong performance of automobiles, a key export item. The effective tariff rate on automobiles and parts, which had surged to 21.3% in the second quarter and 23.8% in the third quarter of last year, fell to 13.5% in the first quarter of this year. A major factor was the reduction in the tariff applied to Korean-made cars from 25% to 15% beginning last November. Although rival countries Japan and Germany received tariff reductions earlier, in August and September last year, widening the gap for a time, as of the first quarter this year South Korea is subject to a lower rate than Germany (14.5%). The rate remains slightly higher than that of Japan (12.5%), but the gap has narrowed significantly.

In the overall effective tariff ranking, South Korea placed 6th, after China (26.4%), India (14.1%), Japan (11.2%), Germany (10.3%), and Vietnam (9.9%), indicating a lower tariff burden than Japan and Germany.

Unlike autos, the steel sector remains blocked by a high tariff wall. The effective tariff rate on steel and steel products has steadily climbed since a 50% product-specific tariff took effect in June last year, reaching 42.5% in the first quarter of this year. This is higher than rival exporters Brazil (22.7%), Mexico (15.8%), and Canada (23.1%). In particular, Brazil faces a lighter burden because more than half of its steel exports to the U.S. are pig iron and ferroalloys, which are subject to lower rates. By contrast, South Korea ships a higher share of finished goods such as pipes and flat-rolled products, resulting in stronger tariff pressure.

The absence of tariffs on some items such as semiconductors and energy also created cross-country differences in effective rates. Taiwan and Thailand, where semiconductors account for a large share of exports to the U.S., recorded low effective rates of 3.0% and 7.4%, respectively. Mexico (3.7%) and Canada (3.1%) are benefiting from the United States-Mexico-Canada Agreement (USMCA).

The Chamber assessed that although the overall tariff burden has decreased, uncertainty in the trade environment remains. This is because U.S. tariff policy is fluctuating, with recent court rulings invalidating tariffs based on IEEPA and additional decisions related to Section 122 of the Trade Act. There is also concern that tariff rates could change abruptly depending on the outcome of the ongoing Section 301 investigation by the U.S. Trade Representative (USTR). The Chamber urged the government to monitor Section 232 tariff measures and provide diplomatic support, while advising companies to enhance price competitiveness through steps such as domestic production tax credits and stronger export financing. Kang Min-jae, head of economic policy at the Chamber, said, “It is true that the burden has eased compared with the early phase of tariff imposition, thanks to synergy between government negotiating efforts and private-sector responses,” while adding, “Tension on the ground remains because of external uncertainties such as exchange rates and raw-material costs.” He continued, “With global issues piling up, the public and private sectors need to respond nimbly as a team.”