U.S. President Donald Trump announced that a 25% reciprocal tariff will be imposed on farm machinery from Korea starting on July 1, raising alarms in the domestic agricultural machinery industry, which heavily relies on exports to North America. Following the 10% universal tariff implemented by the U.S. government in April, an additional 25% tariff would mean a total burden of 35% on the products.
According to the agricultural machinery industry on the 8th, the implementation of the reciprocal tariff, originally scheduled for July 8, has been somewhat delayed, leading the industry to temporarily enter a phase of "catching its breath." However, as President Trump reiterated that if an agreement is not reached by August 1, he will proceed with the tariff imposition, there is a growing necessity for the industry to develop concrete countermeasures.
The export reliance of domestic agricultural machinery corporations is quite high. Daedong, the industry leader, generated 957.7 billion won solely from agricultural machinery exports in 2023, which accounts for 74% of its total revenue of 1.2942 trillion won. In 2024, exports are expected to contribute 919.3 billion won out of total revenue of 1.2059 trillion won, and in the first quarter of this year, 235.9 billion won came from exports out of 335 billion won. TYM is in a similar situation, with an export share of 71% in 2023, projected at 62% in 2024 and reaching 65% in the first quarter of this year.
In particular, the revenue reliance on the North American market is high. Daedong exports medium and large tractors with 90 to 140 horsepower (hp) to the North American market, and sales generated from the North American market account for 40% of its total revenue. The market share of North American tractors is also high at approximately 10.8%.
TYM also exports small and medium tractors with 25 to 55 hp to the North American market, and in the first quarter of 2025, TYM's sales in the North American market represent 60.2% of its total revenue. Given the high reliance on the North American market, it is inevitably susceptible to the impact of U.S. tariffs.
In particular, agricultural machinery requires about three months of lead time from shipment to actual sale, leading local corporations to hold stock for 3 to 6 months in advance.
Until now, the impact of the universal tariff (10%) has been limited due to existing stock, but as inventory has been rapidly depleted recently, there are growing concerns that the significant tariff burden could harm export competitiveness starting in the second half of the year.
In fact, some corporations have already enacted or are planning price increases. TYM has raised prices this year to reflect increases in raw material and logistics costs, and Daedong is also reportedly considering a price hike in the North American market during the second half of the year. However, a TYM representative explained that this decision is "not primarily aimed at passing on the tariff but rather due to a combination of rising expenses."
There are also calls for a government-level countermeasure to minimize the export impacts from the imposition of tariffs. Another industry representative noted that "effective trade response policies are needed, such as expanding government-level export insurance, subsidizing U.S. customs costs, supporting the use of free trade agreements (FTAs), and broadening the application of raw material allocation tariffs."