[News Today] RECIPROCAL TARIFF IMPACT ON S.KOREA

[LEAD]
U.S. President Donald Trump has sparked a tariff war within weeks of his inauguration. China is already retaliating, set to impose tariffs on U.S. crude oil and other imports. Despite having a Free Trade Agreement with the U.S. that eliminates most tariffs, South Korea's status remains unstable due to the potential inclusion on the reciprocal tariff list.

[REPORT]
U.S. President Donald Trump has announced plans to impose tariffs on American imports equal to those that America's trading partners impose on its exports.

For instance, the EU levies a 10% tariff on American vehicles, so the U.S. will raise its tarrifs on European cars from the existing 2.5% to 10%.

Donald Trump / U.S. President (Feb. 8)
I'll be announcing that next week, reciprocal trade, so that we're treated evenly with other countries. We don't want any more, any less.

In other words, Washington wants to adjust tariffs on its trading partners in line with theirs.
Korea has a free trade agreement with the U.S. Therefore most of the imports and exports between the two countries are tariff-free.

Under the reciprocal tariffs, if a certain U.S. product is subject to zero tariffs in Korea, the same product made in Korea must also be exempted from tariffs in the U.S.

However, Korea could be subject to reciprocal tariffs if reciprocity is applied based on trade balance.

From the U.S. standpoint, Korea is its eighth largest trade deficit partner.
Last year Korea's trade surplus with the U.S. recorded 81 trillion won, or around 55.5 billion dollars.

President Trump initially announced plans to impose additional 25% tariffs on Mexico and Canada, which have trade pacts with the U.S. similar to FTAs.
But he agreed to pause after the two countries pledged to boost border security enforcement in return.

Pundits say the U.S. could demand that the FTA with Korea be re-negotiated, or push for overhauling the non-tariff barrier.