US to Announce Reciprocal Tariffs at 5 AM KST on the 3rd…20% Likely

President Donald Trump of the United States will announce reciprocal tariffs on the afternoon of the 2nd (local time, 5 AM KST on the 3rd) and will implement them immediately.

The tariff war initiated by Trump, which had previously targeted certain countries like China, Canada, and Mexico, as well as specific products such as steel and aluminum, is expected to expand to a global level.

There are concerns that the global trade order based on free trade will rapidly change as China and others have taken retaliatory measures, and other countries like the European Union (EU) have also announced countermeasures.

President Trump is scheduled to announce the reciprocal tariffs directly in the Rose Garden of the White House at 4 PM on the 2nd (5 AM KST), which he has called 'Liberation Day.' The concept of reciprocal tariffs is that the US will impose tariffs equivalent to the tariffs and non-tariff barriers that other countries impose on the US.

Previously, President Trump mentioned on the 31st of last month that he had made a decision regarding reciprocal tariffs, but the specific details are still unknown. However, President Trump has mentioned that tariffs will be imposed on all countries, but the rates will be relatively lenient compared to the tariffs those countries impose on the US.

On the 31st of last month, he also stated, "It is reciprocal. If they impose (tariffs) on us, we will impose them," adding, "We will treat them (better than they treat us)."

The White House has reportedly presented President Trump with options such as imposing a single tariff rate of 20% on all imports or applying individual tariff rates by country.

The single tariff rate is essentially the same concept as the so-called universal tariff that President Trump promised during last year's election.

Spokesperson Caroline Levitt stated in a briefing on the 1st, "President Trump and the trade and tariff team are perfecting it." The White House explained that the reciprocal tariffs will take effect immediately upon announcement.

Previously, on February 13th, President Trump instructed the Department of Commerce and the United States Trade Representative (USTR) to identify and report on tariffs and other trade barriers by country. Accordingly, the USTR released the annual 'National Trade Estimate Report (NTE)' the previous day, mentioning various non-tariff barriers regarding Korea.

These include the ban on importing US beef over 30 months old, offset trade in the defense sector, digital trade barriers such as trends in promoting online platform laws, and issues with import car emission regulations.

In a speech to Congress on the 4th of last month, President Trump claimed that Korea's tariff rates are 'four times those of the US,' but Korea has a Free Trade Agreement (FTA) with the US, so there are effectively no tariffs on the US, and the NTE also stated this. However, Korea's trade surplus with the US reached a record high of $55.7 billion last year.

The issue of trade imbalance is one of the reasons why President Trump has brought out the comprehensive tariff card, and there are considerable concerns that Korea may also become a major target of reciprocal tariffs.

For example, when Treasury Secretary Scott Besant recently mentioned the 'Dirty 15' while naming the worst countries in terms of tariffs, many analysts believed that Korea was likely included.

In response to President Trump's reciprocal tariffs, the Korean government is struggling to come up with countermeasures, such as holding an emergency meeting presided over by Acting President and Prime Minister Han Duck-soo.

Acting President Han called the heads of the four major groups on the 1st to hold an economic security strategy task force (TF) meeting and announced plans to implement measures to reduce the impact of reciprocal tariffs, emphasizing comprehensive communication with the US.

President Trump also stated that there could be room for negotiation after the announcement of reciprocal tariffs. On the 28th of last month, he said, "If we can get something from negotiations, it is possible," suggesting the timing of negotiations after the announcement of reciprocal tariffs.

Apart from reciprocal tariffs, a 25% tariff on steel and aluminum products, which was implemented on the 12th of last month, will be followed by a 25% tariff on automobiles, effective from 12:01 AM on the 3rd.

Additionally, the measure to defer the 25% tariff on Canada and Mexico, only for goods subject to the United States-Mexico-Canada Agreement (USMCA), will end on the 2nd, and it is not yet known whether the deferral for these countries will be extended.

President Trump has also announced plans to impose item-specific tariffs on pharmaceuticals, semiconductors, and more.

If item-specific tariffs are expanded following reciprocal tariffs, Korean products are expected to compete with US products in a much less favorable situation in the US, their main export market.

Furthermore, if other countries competitively impose tariffs in response to the US's reciprocal tariffs, it is expected that the tariff barriers in the global market will rise sequentially, intensifying trade competition between countries.

Reporter Koh Jung-sam, Hankyung.com jsk@hankyung.com