A 25 percent tariff slapped on imported vehicles and auto parts by the United States could have a serious impact on South Korean and U.S. carmakers in the long term, a local think tank said Wednesday.
If the US invokes Section 232 tariffs on vehicles and components imported from the European Union and other trading partners, it could have far-reaching consequences for the auto industry around the world, the Korea Economic Research Institute said in its recent report.
"If the country does not get an exemption from the heavy duties, Korea's overall vehicle production could drop by 8 percent and the country's trade balance is projected to decline by up to $9.8 billion," the KERI report said.
Moreover, the U.S. may face retaliatory tariffs on its vehicles and auto parts by its trading partners, it said.
"The U.S. move to protect its auto industry through higher tariffs on imported vehicles rather than technology development and innovation will hurt the competitiveness of U.S. carmakers over the long haul," KERI researcher Jeong Jae-won said in the statement.
In May last year, US President Donald Trump ordered a comprehensive assessment into whether foreign cars and parts posed security threats. Under Section 232, Trump can order import adjustments that could affect trade. (Yonhap)