The Korean economy risks stagnant growth this year as the global trade war escalates after US President Donald Trump imposed high tariffs on America’s major trading partners.
Reflecting the concerns, the KOSPI index fell 2.52 percent from the previous session and the local currency lost 14.5 won against the US dollar to close at 1,467.2 won against the greenback ahead of Trump’s tariff announcement. According to market observers, Korea’s 2025 GDP growth could slow to mid-1 percent in the worst-case scenario. This is lower than the Ministry of Economy and Finance’s forecast of 1.8 percent and the Bank of Korea’s (BOK) projection of 1.9 percent. Trump’s tariffs of up to 25 percent on almost all imports from Canada and Mexico, and 10 percent on goods from China, in addition to the various tariffs they are already facing, are adding to a more skeptical view of the export-dependent economy. In addition to the possibility of a tariff targeting only Korea, the country’s policy of close sourcing could backfire as Trump threatens to expand the tariff war, experts said. Citing Canada and Mexico’s retaliatory responses against the US, the Korea Institute for International Economic Policy said the expansion of international measures against US tariffs could reduce Korea’s annual global exports by up to $44.8 billion. According to the institute, this amount is large enough to reduce Korea’s annual GDP by up to 0.67 percent.
https://www.koreatimes.co.kr/www/biz/2025/02/126_391448.html
