Donald Trump, the U.S. president, has granted a 90-day extension on reciprocal tariffs for countries excluding China, allowing the domestic distribution industry to breathe a brief sigh of relief as exports to the U.S. increase. However, the possibility of reinstating tariffs in three months remains, and the won-dollar exchange rate is also hovering in the mid-1400s, indicating significant uncertainty. The industry is watching the government's negotiation process closely while actively preparing countermeasures.
On the 9th, U.S. President Trump noted through his social media platform, Truth Social, that "more than 75 countries want to negotiate with the United States on various topics, including trade, tariffs, currency manipulation, and non-tariff barriers," and that these countries would not take any retaliatory measures and have agreed to waive reciprocal tariffs for 90 days while significantly lowering the basic tariff rate of 10%. However, he stated that the tariff rate against China would be raised to 125% in response to retaliatory tariffs.
The food industry is responding positively for the time being. According to the Ministry of Agriculture, Food and Rural Affairs, last year's K-food export volume reached $13 billion (approximately 19 trillion won), marking the highest level ever. Among this, the export volume to the U.S. accounted for $1.59 billion (approximately 2.3 trillion won), making up 12.3%. The significant increase in exports of processed foods such as instant noodles, which rose by about 31% compared to the previous year, played a major role. The government has also set this year's K-food export target at $14 billion (approximately 20.4 trillion won), an increase of 8.1% compared to last year.
One of the biggest beneficiaries is Samyang Foods, which produces "Buldak Bokkeummyeon." The company reported that of its total sales of 1.728 trillion won last year, 77% (1.3359 trillion won) was generated from overseas, with 28% of its overall exports coming from the U.S. market. Samyang Foods directly feels the impact of tariffs since all its products are manufactured domestically.
Nevertheless, the evaluation is that it is difficult to let the guard down. A representative from Samyang Foods stated, "We have been forming a related task force (TF) to explore response measures since shortly after the announcement of the reciprocal tariffs in early this month," adding, "Given the rapid changes in U.S. policy, it is challenging for individual corporations to take proactive actions. We are monitoring the negotiation process of our government while considering various possibilities."
Daesang, which is ranked first in the global kimchi sector under the 'Jongga' brand, is also not free from the impact of tariffs. Daesang established a factory in Los Angeles in 2022 and expanded local production by acquiring the American company Lucky Foods in 2023, but the export volume of Korean products is still twice that of local production.
Food corporations are demanding government support and urging negotiations with the U.S. They attended an export company meeting held by the Ministry of Agriculture, Food and Rural Affairs on the 8th, requesting an expansion of export vouchers, diversification of export markets, and increased support for trade finance.
The fashion industry has also found some relief due to the tariff extension. Most fashion companies have set up production facilities in Southeast Asia, including Vietnam, due to labor costs, and produce clothing based on orders from brand fashion companies, taking mid-level profits. However, a 46% tariff was supposed to be imposed on products from Vietnam.
Fashion corporations are planning to increase production in the U.S. or relocate factories. For example, Hansei Industry produces about 40% of its overall clothing at eight factories in Vietnam, with 85% of its exports going to the U.S. The company plans to actively utilize factories in El Salvador and Guatemala, which have a low tariff rate of 10%. Additionally, they are considering expanding production volumes in the local factory of the American textile company, Texolini, acquired in September last year.
The furniture industry is also paying attention to tariff risks. ZINUS, a subsidiary of Hyundai Department Store Group that focuses on mattresses, generates 80% of its total sales from the U.S., with about 70% of its total production occurring in Indonesia. The reciprocal tariff imposed by the U.S. on Indonesia is 32%.
Some in the industry anticipate that ZINUS will negotiate price increases with major clients. A ZINUS representative stated, "We are keeping an eye on the situation."
Jung In-kyo, head of the Trade Negotiation Bureau at the Ministry of Trade, Industry and Energy, remarked on the recent tariff waiver measures by the U.S., saying, "It is positive that we have gained time to minimize potential damage to our industry through future negotiations with the U.S.," adding, "We will approach negotiations with a cautious strategy to maximize national interests while closely monitoring the negotiation progress of other countries."
Seok Byeong-hoon, a professor of economics at Ewha Womans University, stated, "During the negotiations that will take place during this tariff waiver period, Korea must bring out cards that can effectively influence the U.S. while minimizing expenses," suggesting that increasing imports of U.S. liquefied natural gas (LNG), raising defense cost-sharing, and expanding shipbuilding cooperation could be methods.
Seo Yong-gu, a professor of business administration at Sookmyung Women's University, noted, "Although U.S. tariffs have been temporarily waived, there is a high likelihood that the direction will remain the same," stating, "While there may be direct damage to distribution companies, if exports from other industrial sectors decline, the domestic economy could face further recession." He continued, "In a do-or-die situation, distribution companies must continue attempts to diversify exports to various regions, including Southeast Asia and Europe."