Concerns rise as Mexico is included in U.S. tariff targets

[Anchor]

The inclusion of Mexico in the U.S.'s tariff targets is an immediate concern for us.

This is because many of our companies are operating in Mexico in sectors such as automobiles and electronics.

Reporter Kim Ji-sook has investigated the impact on our industry.

[Report]

Mexico has been considered the biggest beneficiary of the reshaping of the supply chain from the United States.

Under the USMCA, which replaced the North American Free Trade Agreement, products such as cars and parts made in Mexico receive tariff-free benefits when entering the U.S., and they can also benefit from subsidies under the Inflation Reduction Act, which requires final assembly in North America.

Additionally, Mexico has low production costs, including labor, which has led companies like Samsung Electronics and LG Electronics, as well as automotive-related companies, to enter the market.

When the tariff increase becomes a reality, the biggest concern for our companies is price increases.

Since tariffs will be imposed on parts and finished products, the selling prices are bound to rise.

Our companies have stated that they will respond flexibly to this announcement while preparing strategic changes such as diversifying production locations.

However, there are also industries that may benefit indirectly.

In the case of transformers, the U.S. imports the most products from Mexico.

Now, the biggest interest is whether Trump's mention will actually materialize or if it is merely a negotiation tactic.

[Cho Sung-dae/Director of Trade Research, Korea International Trade Association: "(This time) it does not seem to be raising the issue of trade deficits, but rather it uses tariffs as a means to urge a response to illegal immigration and drug enforcement, which are the ultimate goals."]

As of the second quarter of this year, South Korea's investment in Mexico amounts to $1.4 billion, making it the seventh largest after the U.S. and Canada.

KBS News, Kim Ji-sook.