South Korea's acting President Han Duck-soo called on Thursday for talks with U.S. officials to shield the export-reliant economy from the impact of U.S. tariffs and ordered emergency support measures for businesses.
U.S. President Donald Trump has unveiled global reciprocal tariffs that include a 25% rate on South Korea.
Han asked the industry minister to analyse the content of the tariffs and actively negotiate with Washington to minimise the impact, an industry ministry statement said.
"As the global trade war has become a reality, the government must pour all its capabilities to overcome the trade crisis," Han said at a meeting with the finance minister and other top officials.
The industry ministry said Seoul will pursue consultations with both senior and working-level U.S. officials on tariffs.
Trump in his speech singled out Washington's Asian security allies South Korea and Japan, accusing them of being among the worst offenders for conducting unfair trade practices against the United States.
Analysts in Seoul said Trump's extensive rollout of tariffs was harsher than expected, casting a cloud over the export-reliant economy.
"For the domestic economy, a significant blow will be inevitable," said Park Sang-hyun, an economist at iM Securities.
"It is clear that major export products such as automobiles will be hit hard, and exports to the U.S. through production bases in Vietnam will also be hit hard," Park said in a note.
Trump also said he will slap a 46% duty on imports from Vietnam. South Korea's major corporations such as Samsung Electronics and LG Electronics have manufacturing bases in the Southeast Asian country.
The benchmark KOSPI stock index (.KS11) fell as much as 2.7% to three-month lows in early trade, as automakers hit their weakest levels in more than 14 months. Chipmakers also slumped, while battery maker LG Energy Solution (373220.KS) hit a record low.
It was unclear what emergency measures South Korea would announce to try to mitigate tariffs, but Han is due to preside over a meeting with the private sector later on Thursday to discuss responses to the U.S. tariffs.
The efforts to tackle the tariffs come as South Korea has also been suffering from a leadership vacuum. The Constitutional Court is due to rule on Friday whether to permanently remove or reinstate President Yoon Suk Yeol after he was impeached over his short-lived move to impose martial law in February.
Before Trump's announcement on reciprocal tariffs, South Korean officials had sought exemptions, arguing the country had almost zero tariffs in place under a comprehensive free trade pact with the United States.
"It is assessed to have practically nullified the Korea-U.S. Free Trade Agreement," said Paik Seok-hyun, an economist at Shinhan Bank, referring to Trump's new tariffs.
A finance ministry official told Reuters that the information available so far suggested the 25% tariff rate took precedence over the free trade pact and the government is actively seeking negotiations with the United States to lower it.
