Latest news with #NationalTradeEstimateReportonForeignTradeBarriers
Forbes
03-04-2025
- Business
- Forbes
Trump's Tariff Shock: What It Means For U.S. Consumers
US President Donald Trump holds a reciprocal tariffs poster during a tariff announcement in the Rose ... More Garden of the White House in Washington, DC, US, on Wednesday, April 2, 2025. Photographer: Kent Nishimura/Bloomberg President Donald Trump surprised global markets with his much-anticipated announcement of sweeping import tariffs. While most investors expected the White House to implement reciprocal tariff rates, the final plan resembled a worst-case scenario. The tariffs were significantly higher than anticipated, leaving investors worried about the implications. The executive order outlined both a universal tariff of 10% and a country-by-country tariff with some exemptions. Rates will apply uniformly to all non-exempt products rather than varying by product and were based on perceived total trade barriers for each country. Total trade barriers include actual tariff rates plus non-tariff measures that can impact the level of trade. Non-tariff barriers are rules or policies that make it harder for countries to trade goods without directly applying a tax. These barriers can include import quotas, licensing requirements, quality standards, packaging and labeling rules, or customs delays. As a proxy for the total trade barriers, the Council of Economic Advisers calculated rates using a formula primarily based on the U.S. trade deficit with each country. The methodology divided the trade deficit by the total value of imports from that country and then halved the result. For example, if a country had a $100 billion trade deficit with the U.S. and exported $200 billion worth of goods to the U.S., the formula would yield a 25% tariff rate. 'Large and persistent annual U.S. goods trade deficits are caused in substantial part by a lack of reciprocity in our bilateral trade relationships,' the executive order stated. It appears the White House is defining reciprocal trade in terms of the size of the trade deficit. If there is a trade deficit, the administration points to non-tariff barriers. President Trump referred to the 2025 National Trade Estimate Report on Foreign Trade Barriers, published by the Office of the United States Trade Representative, in his speech. The report provides a detailed analysis of the trade barriers faced by American exporters. Given their large trade deficits with the United States, Asian countries were among the hardest hit. Below is a brief analysis of some of the non-tariff barriers cited in the report, which the administration used to justify the high tariff rates on China, Japan, South Korea, and Vietnam. For each country, the new tariff rate and the potential impact on the average American are listed. It is important to note that the extent of retaliation from these countries is still unknown. 1. Intellectual Property Rights: Despite reforms, China still faces criticism for weak enforcement of IP laws. U.S. companies suffer from patent infringement, counterfeit goods, and inadequate legal protection. 2. Industrial Policy Discrimination: China provides subsidies and incentives to local firms, often excluding or limiting access to foreign competitors. 3. Market Access Limits: U.S. firms face strict licensing rules in cloud computing, banking, and digital services, where U.S. firms are global leaders. 4. Agricultural Restrictions: U.S. beef, poultry, and genetically modified crop exporters face long approval delays and standards that aren't always scientifically justified. Higher tariffs on Chinese imports could raise prices on various consumer goods, from electronics to clothing. Many of these items are assembled or manufactured in China, meaning cost increases could be passed down to U.S. consumers. Meanwhile, U.S. exporters of agricultural and tech goods might see reduced demand, which could impact American farmers and tech workers if China retaliates. 1. Unique Automotive Standards: U.S. vehicles must often undergo expensive modifications to meet Japanese standards, limiting market entry. 2. Pharmaceuticals and Medical Devices: Japan has long approval timelines and a complex reimbursement process that delays access to U.S. health innovations. 3. Agricultural Import Controls: High quotas and restrictive inspections hinder U.S. rice, beef, and dairy exports. 4. Services Barriers: Insurance and telecom providers face regulatory requirements that favor domestic players. Japan is a major exporter of high-quality automobiles and electronic goods. Tariffs on Japanese imports could mean higher car prices, appliances, and high-end tech prices. American consumers could see price hikes or fewer options at dealerships. On the flip side, U.S. exporters of medical and food products may gain leverage if Japan loosens non-trade barriers to avoid retaliatory duties. 1. Automotive Standards: U.S. auto manufacturers must tailor vehicles to meet Korean safety and emissions regulations. 2. Agricultural Restrictions: Stringent SPS measures and slow biotech approvals block U.S. products like corn and soybeans. 3. Opaque Pharmaceutical Pricing: Government-set reimbursement levels can put U.S. drugmakers at a disadvantage. 4. Service Sector Limitations: Foreign legal and telecom services are heavily restricted or require joint ventures. 5. Weak IP Enforcement: Online piracy and counterfeiting remain problematic. South Korea is a major supplier of electronics, cars, and semiconductors. Tariffs on these products could raise prices on TVs, smartphones, and electric vehicles. In addition, U.S. exporters of agricultural products and biotech may be impacted if Korea responds with trade barriers of its own, potentially affecting rural economies dependent on exports. 1. Customs and Valuation Issues: U.S. exporters face delays due to unpredictable customs practices and inconsistent rule enforcement. 2. Technical Barriers to Trade: Divergent electronics, cosmetics, and medical device standards make it harder to sell U.S. products. 3. IP Challenges: Enforcement of copyrights and trademarks is still developing, with pirated goods commonplace in many markets. 4. Investment Limits: Foreign equity caps in sectors like telecom and banking restrict full market participation by U.S. firms. Vietnam has become a go-to manufacturing hub for clothing, shoes, furniture, and electronics. Tariffs on Vietnamese imports could mean higher costs for everyday essentials like apparel, home goods, and consumer technology. The White House believes that tariffs, rate differentials, and non-tariff barriers distort trade and disadvantage American businesses. President Trump's intention behind the high tariffs is to reshape global trade by addressing longstanding trade imbalances, reducing reliance on imports, and boosting U.S. manufacturing. The goal of the tariffs is to incentivize companies to relocate production to the U.S., creating jobs and strengthening domestic industries in the process. A lack of strength in certain domestic industries would put the U.S. at a strategic geopolitical disadvantage in the event of a prolonged conflict with its largest trading partners, which supply products critical for national security. According to the administration, the only way to solve that problem would be to source and manufacture those products in the U.S. These tariffs will undoubtedly raise much-needed revenue for the federal government but may also have consequences for domestic consumers. From higher prices on smartphones, apparel, and consumer electronics, the average American will likely feel at least some effects of escalating trade tensions. The cost of the tariffs will be absorbed by the exporter, the importer, or the consumer and will vary by product and industry. By implementing reciprocal tariffs, President Trump is trying to level the playing field and generate revenue for the government while signaling a move away from globalization toward economic self-reliance. Now that the tariff policy appears set, the administration's next focus should be on finding ways to ease Americans' costs as trade relationships are redefined. Republican Senator Tim Sheehy of Montana provided a good anecdote on the impact of the tariffs during a CNN interview on March 31. "There's absolutely going to be short-term pain," Sheehy said. "The president's been clear about that, everyone has. I mean, if you're going to remodel your house to make it better in the end, it's gonna be really annoying in the short-term when your house is getting remodeled."
Korea Herald
01-04-2025
- Business
- Korea Herald
USTR flags Korean trade barriers as new Trump tariffs loom
Report raises concerns on Korea's defense offset program, foreign ownership of nuclear power operations for first time The Office of the US Trade Representative released an extensive report on foreign trade barriers on Monday, pointing out South Korea's policies in automobiles, beef imports, defense trade and nuclear power plants as areas of concern. The annual National Trade Estimate Report on Foreign Trade Barriers carries added significance this year, as US President Donald Trump is set to roll out sweeping reciprocal tariffs on all trading partners on Wednesday. It is still unclear to what extent the report submitted to Trump and the US Congress will affect Trump's reciprocal tariff plans. But Trump has repeatedly stated that tariffs and nontariff measures deemed unfair or discriminatory against American businesses will factor into decisions on the scope of reciprocal tariffs. 'No American president in modern history has recognized the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump,' said US Trade Representative Jamieson Greer in a statement. 'Under his leadership, this administration is working diligently to address these unfair and nonreciprocal practices, helping restore fairness and put hardworking American businesses and workers first in the global market.' The 397-page report identified trade barriers in around 60 countries and regions, with seven pages dedicated to South Korea. While many issues listed had already been mentioned in last year's edition, the latest report flagged South Korea's defense offset policies as a barrier for the first time. 'The Korean government has pursued policies that prioritize local technology and products over foreign defense technology through its defense offset program,' the report said. 'An offset obligation may arise for a foreign contractor should the value of the defense contract exceed $10 million.' Under Korea's defense offset program, foreign contractors participating in major government procurement projects are required to fulfill certain conditions, such as technology transfers and other defense industrial cooperation. Other countries also have similar defense offset programs. The report also cited investment restrictions in Korea's power sector, mentioning for the first time that foreign ownership of nuclear power operations is banned. 'Korea prohibits foreign ownership in the nuclear power generation sector and limits foreign ownership to no greater than 30 percent in hydroelectric, thermal, solar and other forms of non-nuclear power generation,' it said. While last year's report mentioned limits for hydro, thermal and solar power ownership, it was the first time that nuclear energy was included. The long-standing issue over beef imports again appeared in the report. The USTR raised the issue on Korea's ban on imports of US beef from cattle over 30 months old. The measure was put in place in 2008 following concerns over bovine spongiform encephalopathy, commonly known as mad cow disease. 'This 'transitional measure' has remained in place for 16 years. In addition, Korea continues to prohibit the import of processed beef products, including ground beef patties, beef jerky and sausage, regardless of age.' On the automotive front, the report highlighted that improving market access for US carmakers remains a 'key priority' for the US. Though similar concerns were issued in last year's report, the renewed focus comes as Trump announced 25 percent tariffs on all foreign and imported cars starting Thursday. The USTR also raised concerns on Korea's emission-related components regulations under the Clean Air Conservation Act, which requires carmakers to obtain certification when making component changes. But the US auto industry has raised concerns about 'lack of clarity' over what types of modifications fall under which category, it added. The report further noted that US carmakers could be subject to criminal prosecution by Korea's customs authorities, which lack jurisdiction over automakers. Digital trade issues were also addressed. The USTR criticized legislation in Korea that would require foreign content providers to pay network usage fees to Korean internet service providers. 'Because some Korean ISPs are also themselves content providers, fees paid by US content providers could benefit a Korean competitor,' it said. The report also took issue with Korea's restrictions on the export of high-precision mapping data, in an apparent aim at the Korean government rejecting Google's request for high-resolution data, citing national security concerns. 'Korea's restrictions on the export of location-based data have led to a competitive disadvantage for international suppliers seeking to incorporate such data into services offered from outside Korea,' it said. 'Korea is the only significant market in the world that maintains such restrictions on the export of location-based data.' In response, South Korea's Industry Ministry on Tuesday said the report assessed Seoul 'more favorably' compared to other US trade partners. It added that the concerns raised in the report largely reflect issues continuously raised by the previous NTE reports and by US stakeholders. The ministry said there were 21 non-tariff measures related to Korea that were mentioned in the report, a slight increase from last year, but still far below the roughly 40 issues identified before 2023. The Korean government will continue to address US concerns over nontariff measures with Washington through various communication channels, it added.
Korea Herald
12-03-2025
- Business
- Korea Herald
US beef industry urges Trump to push Korea to lift import ban on beef from older cattle
A US livestock industry group has denounced South Korea's ban on importing US beef from cattle older than 30 months, labeling it an "unfair trade practice" and urging President Donald Trump's administration to push for its removal. On Wednesday, the Office of the United States Trade Representative submitted an opinion letter addressing unfair trade practices by US trading partners, drafted by the National Cattlemen's Beef Association. In the letter's section on Korea, the NCBA acknowledged that the "30-month age-based restriction" on US beef is a "sensitive issue" but emphasized that it "should not be ignored." The NCBA insisted that the US upholds the world's strictest standards and safeguards against bovine spongiform encephalopathy, commonly known as 'mad cow disease.' It pointed out that countries such as China, Japan and Taiwan have already removed similar restrictions and argued that Korea should follow suit. The association urged the US government to engage in discussions with Korea to eliminate the age limit and strengthen trade relations based on scientific principles, emphasizing its support for a level playing field across the US cattle and beef industry. "Since 2021, Korea has been the largest importer of US beef for four consecutive years," an official from a trade organization said on condition of anonymity. "In this context, it is unclear how much weight the US government will place on the letter. However, since US trade demands can be multifaceted, our government needs to approach negotiations in a way that considers not just one sector but the overall national interest," the official added. Korea's restriction on beef from cattle older than 30 months stems from BSE concerns and was established in 2008 following extensive negotiations between the two countries. Under the agreement, Korea resumed US beef imports, and imports have since surged, making the country the largest importer of US beef for years. The USTR's National Trade Estimate Report on Foreign Trade Barriers, published last year, noted that the 30-month restriction was originally intended as a "transitional measure" but has remained in effect for 16 years. The report also highlighted that certain processed meat products, such as ground beef patties, jerky and sausages, are still banned from import. Under Trump's directive, the USTR is set to submit a report by April 1 on unfair trade practices by US trading partners, along with recommendations for corrective measures that will guide the president's response.
Korea Herald
10-03-2025
- Business
- Korea Herald
Fact-checking Trump's tariff claim about South Korea. What are his real motives?
Trump's tariff claim seen as strategy to pressure Korea on trade and security US President Donald Trump's March 4 claim that South Korea levies tariffs four times higher than those of the US has sparked controversy about its accuracy as well as concerns about the possible intent behind the statement. 'China's average tariff on our products is twice what we charge them, and South Korea's average tariff is four times higher,' Trump said in a speech at a joint session of Congress last week. 'Think of that, four times higher, and we give so much help militarily and in so many other ways to South Korea, but that's what happens. This is happening by friend or foe.' Trump singling Korea out has stoked concerns among policymakers and businesses here, fearing that Asia's fourth-largest economy could be next in line for "reciprocal tariffs" by the US leader. Trump might attempt to justify such a move by claiming that South Korea puts significantly higher duties on American imports. Here, The Korea Herald checks the facts behind Trump's claims and sheds light on his possible motives behind them. Trump did not provide any details on where he got his tariff figures. However, observers say his words could be erroneously based on the most-favored-nation tariffs ― the standard tariff rates countries impose on imports from other members of the World Trade Organization unless there is a preferential tariff arrangement like an FTA. Seoul's MFN tariff rate stands at 13.4 percent, approximately four times higher than the US rate of 3.3 percent. But this doesn't apply with the US, which has a free trade deal with Korea since 2012 and is subject to preferential tariffs. 'Under the Korea-US Free Trade Agreement, both Korea and the US have eliminated tariffs on most goods. As of 2004, Korea's effective tariff rate for goods imported from the US is approximately 0.79 percent,' the Industry Ministry clarified immediately after Trump's remarks. The rate drops further when considering refunds, it added. Some imported goods qualify for additional duty refunds. The tariff rate for US imports is expected to decrease even more this year under a scheduled reduction plan, according to the ministry. The US Trade Representative's annual National Trade Estimate Report on Foreign Trade Barriers also stipulates that most of the tariffs between the two countries have been removed. 'The KORUS entered into force on March 15, 2012. Korea immediately eliminated duties on nearly 80 percent of bilateral trade in industrial and consumer goods,' it said. 'Duties on most other such goods were phased out in stages over 10 years and have been eliminated as of Jan 1, 2021.' Then why did Trump resort to such a claim? What was his actual motive behind it? 'Trump has long expressed dissatisfaction with the trade deficit with South Korea,' said Han Ah-reum, a senior researcher at the Korea International Trade Association, noting that his claim about a fourfold tariff difference appears to be in reference to the MFN rates, not FTA rates. 'Ultimately, this appears to be an attempt to apply pressure on South Korea by citing tariff rate differences that are not actually in effect,' she said. Shin Won-kyu, a researcher at the Korea Economic Research Institute, echoed a similar stance and stressed the need to read between the lines and grasp Trump's actual strategy. 'Trump appears to (be attempting to) maintain a position of leverage (over South Korea) by stressing the issue. His claim is not entirely baseless since there is indeed a fourfold difference in average tariff rates. But (since that doesn't apply in US-South Korea trade,) he is presenting it in a way that fosters anxiety and misunderstanding,' said Shin. 'So it is important to figure out what his real demands are, which is to address the trade deficit and defense cost-sharing. Rather than getting caught up in the 'four-times' claim, it is important to recognize the broader strategy at play.' Right after mentioning South Korea, Trump talked about plans to impose 'reciprocal tariffs' which he claims will address the US' trade imbalances. 'April 2, reciprocal tariffs kick in, and whatever they tariff us, other countries, we will tariff them. That's reciprocal, back and forth,' said Trump in the March 4 speech. Trump has a longstanding view that the US trade deficit ― which means the US imports more than it exports ― is the result of unfair trade policies by other countries. The US, which has run a consistent trade deficit since 1976, hit a high of $1.2 trillion in trade deficit last year. The US posted a $66 billion trade deficit with South Korea last year, according to US figures, making Korea the ninth largest contributor to this figure in the US. The figure is hard to miss for Trump, who is fixated on shrinking this deficit. But the number itself is not the whole story, according to many experts. A big chunk of South Korea's imports to the US consist of intermediate goods ― things like semiconductors, battery components, displays and steel that are used to make other products ― that are essential for US manufacturing. Data from the Export-Import Bank of Korea shows these materials accounted for over half of South Korea's exports to the US during both the first Trump term and Biden's term. Over the past three years, Korean conglomerates like Samsung, Hyundai, SK, LG and Hanwha have injected over $114 billion into the US, building plants and creating jobs. The recent uptick in the trade deficit reflects the local materials being shipped in to construct these new facilities. Another reason behind the US' record trade deficit is the strong US dollar, which makes it more expensive for other countries to buy American products while making imports cheaper. Many agree it is important for South Korea's government officials to explain the reality behind the numbers and negotiate so that Korea won't be disadvantaged. Since Trump's inauguration, South Korean business and government officials have been rushing to the US to meet with Trump administration officials, requesting that South Korean businesses not face disadvantages via Trump's tariffs. South Korea's National Security Adviser Shin Won-shik was the latest to visit Washington. Shin met with his US counterpart Michael Waltz on Thursday and explained that tariffs are barely imposed on US goods under the FTA. His explanation was said to have met with understanding from Trump's national security adviser. Another topic Trump touched on during this March 4 speech was nontariff barriers, which restrict imports or exports of goods or services by means other than duties. 'If they do nonmonetary tariffs to keep us out of their market, then we will do nonmonetary barriers to keep them out of our market,' he said while talking about his April 2 reciprocal tariff plans. Experts also stress that trade relations between Seoul and Washington are not just about tariffs but also involve nontariff barriers. 'The US has consistently raised concerns about South Korea's regulatory environment in its annual National Trade Estimate report,' said Han. 'Issues such as technical barriers to trade and various regulations have been cited as obstacles for American businesses. She noted that some US policymakers have voiced concerns about South Korea's proposed online platform regulations, claiming that they would be "unfair" to Big Tech based in the US. "Some US political circles have been sending messages mixed with complaints that the Platform Competition Promotion Act is a 'discriminatory' measure targeting (US) Big Tech companies. These people see it (Trump's threat of reciprocal tariffs) as a means of pressuring people (in Korea) to ease these regulations," she said. Another potential point of conflict in nontariff barriers is the value-added tax system, which Trump previously stated that the US will treat the same as tariffs for purposes of calculating reciprocal tariffs. 'We will consider countries that use the VAT system, which is far more punitive than a tariff, to be similar to that of a tariff,' Trump posted on Truth Social, the social media platform he owns, last month. South Korea imposes a flat 10 percent VAT on both imports and domestically manufactured goods, applying it at every stage of the supply chain. In contrast, the US does not have a VAT system but applies a sales tax system, which varies by state and is only charged at the final point of sale to consumers. While Trump's stance on VAT appears primarily aimed at the European Union ― where the average VAT rate is around 20 percent, far higher than the typical US sales tax ― observers warn that Korea could also find itself in the crosshairs. 'The US doesn't have a national-level VAT, but state-level sales taxes that generally hover at around 10 percent," said KERI researcher Shin. 'This fundamental difference (created by the different methods of) taxation (in the US vs. in South Korea) could potentially be framed as 'discriminatory,' even though VAT is refundable to businesses, including foreign firms that have entities in Korea.'
