hankyoreh

Changes in share of US import market for different countries

A new study finds that South Korea is benefiting indirectly from sanctions that the US government has imposed on trade with China. But because South Korea’s exports to China have also decreased, analysts say it’s necessary to assess US sanctions’ overall effect on South Korean exports.

The findings appear in “Changes in Share of US Import Market Following US Trade Sanctions on China and Implications,” a report published on Oct. 22 by the Institute for International Trade, under the Korea International Trade Association. According to the report, China’s share of the US import market has fallen by 4.04 percentage points since the US raised tariffs on Chinese products in 2018. China’s share decreased from 17.25% in the first half of 2018 to 13.21% in the first half of 2020.

Since July 2018, the US has increased tariffs on various categories of Chinese imports four times, pushing rates up by an additional 7-25 percentage points. That’s much higher than the average American tariff of 3.1% on manufactured goods.

Over the same period, Asian countries such as Vietnam, Taiwan, Malaysia, Thailand, and Singapore saw their share of the US import market increase by around 1 percentage point. South Korea’s share also increased during that period by 0.87 points, from 3.07% to 3.94%.

“American companies have taken steps to diversify their supply chain in order to avoid risks associated with the trade dispute. The trend of supply chain diversification will continue for now because of the recent surge of COVID-19,” the report said.

Germany, Japan, and India’s share of the US import market fell by 0-1 points.

However, it’s probably too soon to conclude that US sanctions on China are having a positive impact on South Korean exports. A considerable portion of South Korean exports are raw materials sent to China to be processed and then sold to the US. That means that American sanctions could have a negative impact on South Korean exports to China.

The Hankyoreh found that the value of South Korean exports to China decreased by 22.4% between the first half of 2018 and the first half of 2020. Over the same period, South Korean exports to the US only increased by 0.4%.

Jeong Hye-seon, senior analyst with the Institute for International Trade who wrote the report, discussed this issue in a telephone call with the Hankyoreh. “South Korea’s increased share of the US import market is focused on South Korean electronics and automobiles. In order to assess how American sanctions have impacted South Korean exports, there needs to be more research into the ripple effect on South Korea’s exports to China.”

By Kim Kyung-rak, staff reporter

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