2025-04-20
South Korea is considering purchasing liquefied natural gas (LNG) and sharing the cost of stationing U.S. troops in the country as bargaining chips in negotiations with the U.S., which President Trump is seeking to revive, but these are not sufficient materials, and the future is uncertain. South Korea is the second largest shipbuilding nation after China and can produce high value-added vessels such as LNG carriers.
The numbers vary greatly from country to country. This is strongly influenced by the geopolitical and economic intentions behind them. Broadly speaking, it seems that countries with strong economic and strategic ties to China have been given a higher tax rate as a form of sanction. Cambodia, Laos, Vietnam, and Myanmar are all examples of this. On the other hand, countries where U.S. companies have a direct presence have also been given a more restrained rate from a supply chain perspective. Furthermore, from a political and security perspective, the Philippines, for example, which has close military and diplomatic ties with the United States, can be said to be relatively privileged.
On April 12, as I write this, things are still in flux. There is a lot of media coverage every day, with reports on the tariffs reaching almost hysterical levels. The reciprocal tariff rate for Japan announced by the U.S. is 24%, which is an unexpectedly high level given the past relationship between the two countries.
As a result, Japan’s real GDP is expected to fall by about 0.6% in the short term (2025) and 1.8% in the medium term (2029). This will have a huge impact on Japan, which has maintained a growth rate of around 3% per year. It has been reported that Japan is currently negotiating with the Trump administration, but it is doubtful whether the current Japanese government will be able to negotiate effectively with the US. We will see whether the terms will be reconsidered after the negotiations in the future.
I would just like to point out one thing: President Trump talks about Japan’s failure to buy American cars as unfair and negligent, but this is a clear mistake. It is true that American cars do not sell well in Japan. GM is the only company with a formal dealer network in Japan, and it is even hard to find GM dealer shops in Japan. Chrysler pulled out in 2018 and Ford in 2016.
It appears the two main goals for implementing US trade tariffs: to bring more manufacturing jobs to United States and to negotiate more favorable trade agreements to reduce the trade deficit with the rest of the world, could negatively impact the North American medium and heavy truck market. In 2024, the United States trade deficit was $918.4 billion which was a 17% increase from 2023.
April 9, President Trump paused his reciprocal tariffs on most countries for 90 days. The tariffs for most countries would be reduced to 10% during this period. Canada and Mexico will not be impacted by the 10% tariff for goods trading under the U.S.-Mexico-Canada Agreement. However, tariffs on imported Chinese goods were raised to 145% after the Chinese implemented retaliatory tariffs on goods exported into China from the United States.
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