New York Stock Exchange closes slightly higher... Trump hints at possible increase in auto tariffs [Morning Briefing]

◆ New York Stock Exchange closes slightly higher on bargain buying amid mild PPI

The three major indices of the New York Stock Exchange ended the session slightly higher. The U.S. May wholesale price index came in lower than expected and was favorable, which strengthened expectations for a rate cut and boosted bargain buying. On the 12th local time, the Dow Jones Industrial Average closed up 0.24% at 42,967.62. The S&P 500 Index rose 0.38% to 6,045.26, while the NASDAQ Composite Index gained 0.24% to close at 19,662.48. Following the previous day's announcement of the U.S. May Consumer Price Index (CPI), the Producer Price Index (PPI) also showed a milder trend than expected. According to the U.S. Department of Labor, the May PPI rose 0.1% on a seasonally adjusted basis from the previous month, below the market forecast of 0.2%. The core PPI, which excludes food, energy and trade services, also rose 0.1%, missing the expected 0.3% increase. Market analysts attributed this to tariff shocks not yet being fully reflected in goods and services prices. Nevertheless, the mild inflation rate has led to increased expectations for a more favorable environment for rate cuts.

◆ Trump: "Auto tariffs may be raised in the not too distant future"... Impacting the Korean industry

Donald Trump, President of the United States, said on the 12th local time that current tariffs of 25% on foreign automobiles could be raised before long. He stated, "I imposed 25% tariffs on all foreign cars to better protect our auto workers," adding, "I could raise that tariff (even) more in the not too distant future." He further claimed, "The higher the tariff, the more likely they (foreign car makers, etc.) are to build factories here." Since April 3, Trump has imposed a 25% itemized tariff on imported foreign cars. Given that the 25% auto tariff has already impacted Korea's auto exports to the U.S., an additional increase could further affect the Korean car industry and economy.

Previously, the Trump Administration imposed a 25% tariff on steel in March, and also applied a 25% tariff on steel-derived products based on steel content value. On this day, the U.S. Department of Commerce added appliances such as refrigerators, dryers, washing machines, dishwashers, etc. to the list of steel-derived products. Korean electronics companies such as Samsung Electronics and LG Electronics do manufacture some products like washing machines in the U.S., but a significant amount is produced in Korea and Mexico and exported, so these products are expected to be affected by the new tariffs.

◆ U.S. immigration raids and protests put Korean community on alert

With the Trump Administration ramping up crackdowns and deportations of undocumented (illegal) immigrants, the repercussions are spreading throughout the Korean American community, according to Korean civic groups in America. After the Trump Administration unilaterally deployed state guards to suppress protests against U.S. Immigration and Customs Enforcement (ICE) crackdowns in the Los Angeles (LA) area, anxiety and damages in the Korean immigrant community have escalated. The Korean American Service & Education Consortium (KASEC) reported, "Since the Trump Administration deployed state guards in LA, we've received many calls that immigrant workers at Korean markets are not coming to work due to fear of raids," warning, "this situation is not limited to LA, but could expand to other major cities with concentrations of Korean residents." In one case at a Korean market in the suburbs of Philadelphia, Pennsylvania, two immigrants (not Korean) were arrested by ICE agents. Although Koreans were not the target, the fact that U.S. immigration authorities have not previously targeted Korean businesses specifically has heightened anxiety within the local community. Koreans undergoing residency status changes are now also feeling more anxious due to the Trump Administration’s hardline immigration policy.

◆ President Lee to meet with business leaders for first time today, seeking economic breakthrough

President Lee Jae-myung will hold an economic meeting at the Yongsan Presidential Office on the 13th, meeting with the heads of the five major conglomerates and six economic organizations. This will be the first time President Lee meets key business leaders since taking office on the 4th. Attendees will include Lee Jae-yong, Chairman of Samsung Electronics; Chey Tae-won, Chairman of SK Group and the Korea Chamber of Commerce and Industry; Chung Eui-sun, Chairman of Hyundai Motor Group; Koo Kwang-mo, Chairman of LG Group; and Shin Dong-bin, Chairman of Lotte Group. Also attending are Ryu Jin, Chairman of the Federation of Korean Industries; Son Kyung-shik, Chairman of the Korea Employers Federation; Yoon Jin-sik, President of the Korea International Trade Association; Kim Ki-moon, Chairman of the Korea Federation of SMEs; and Choi Jin-sik, President of the Korea Federation of Mid-sized Enterprises. President Lee is expected to emphasize the need for joint efforts to revitalize the economy and request that companies respond with investment and job creation in line with government initiatives.

◆ Cloudy with rain for much of the country

On Friday the 13th, heavy rain is expected mainly in the southern regions and the Chungcheong area. The Korea Meteorological Administration forecasted that it would generally be cloudy nationwide, though the central region will remain mostly clear until morning. The rain, which began early in the southern region, will expand to Jeollabuk-do by morning, the southern parts of Chungcheongnam-do and Gyeongsangbuk-do by late afternoon, and to the metropolitan area, Chungbuk, and northern Gyeongsangbuk-do from night. Rain is expected in most areas on the 14th and will stop by night. Expected precipitation for the 13th to 14th is Jeju 50–120㎜ (over 180㎜ in some areas, over 250㎜ in mountainous regions), Gwangju, Jeollanam-do, Busan, Ulsan, and Gyeongsangnam-do 30–80㎜ (over 120㎜ in some areas), Daegu, Gyeongsangbuk-do 20–80㎜, Daejeon, Sejong, Chungcheongnam-do, southern Chungcheongbuk-do, Jeollabuk-do, Ulleungdo, Dokdo 10–60㎜, southern Gyeonggi-do, central and northern Chungcheongbuk-do 5–40㎜, and Seoul, Incheon, northern Gyeonggi-do, Seohae 5-do (Five West Sea Islands), and Gangwon-do 5–20㎜. Morning low temperatures are forecast to be 15–20°C, and daytime highs 22–30°C. In particular, highs in the metropolitan area are expected to approach 30°C, making for a hot day. Fine dust concentration is forecast to be good to moderate in all regions thanks to smooth air circulation.

Yesrang Kim, Hankyung.com reporter yesrang@hankyung.com