Korea’s Contents in China’s Exports to the US and Its Implications to Korean Exports: The Effects of Trump’s Tariffs on China

Abstract

This study investigates the impact on Korea’s exports when the US imposes additional 25% tariffs on imports of goods from China. For this, Korea’s contents in China’s exports to the US (Korea’s indirect exports to the US via China) are calculated by the decomposition scheme of WWZ (2013) at the industry level using ADB’s MRIO. Major findings are as follows. First, Korea’s exports are expected to decline by US$ 10,334 million to US$ 13,259 million in the experiment of the Trump’s tariffs but the decline in Korea’s exports are expanded to US$ 16,576 million in the IO analysis. Second, the reduction in Korea’s exports are concentrated on electronical and optical equipment (about 50% of the total reductions), metals, chemicals and machinery industries. Third, Taiwan is severely affected country along with Korea from Trump’s tariffs whereas Japan is not. Fourth, China is at the disadvantageous position in the US-China trade war considering the reductions of productions in two super power when the US’s tariff measures are calculated from the IO analysis: US$ 989,566 million for China and US$ 20,193 million for the US.