US cuts tariff on Japanese cars to 15%; Korean autos still face 25% levy

The US has lowered tariffs on Japanese cars to 15% under a bilateral deal, but South Korean autos remain subject to a 25% levy. Seoul is pressing Washington to implement a similar cut under their July trade agreement.

Washington: US President Donald Trump’s administration will start implementing a lowered tariff of 15 per cent on Japanese automobiles this week, in line with a bilateral trade deal.

In a notice posted on the Federal Register, the International Trade Administration under the Commerce Department said that the reduced tariff rate will go into effect from Tuesday — an enactment after Trump’s signing of an executive order earlier this month to officially implement the deal with Japan, reports Yonhap news agency.

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Under the deal, the United States has agreed to lower tariffs on Japanese automobiles and parts to 15 per cent from the current 27.5 per cent — the rate that comprises the existing 2.5 percent tariff and the global sector-specific duty of 25 percent.

Currently, South Korean autos are subject to the sectoral tariff of 25 per cent that the Trump administration has put in place under Section 232 of the Trade Expansion Act of 1962 — a law that gives the president authority to adjust imports when he determines they threaten to impair national security.

The U.S. has also agreed to lower the tariff on South Korean autos to 15 per cent as part of a bilateral trade deal struck in July, but it remains uncertain when the deal will go into force amid negotiations over its specifics.

Upon arrival in the U.S. on Monday, Korea’s Trade Minister Yeo Han-koo underscored Seoul’s ongoing efforts to ensure that the auto tariff reduction can also be implemented for Korean cars “as quickly as possible.”

“As we are in the negotiation process, we will stay level-headed,” he told reporters as he plans to meet U.S. Trade Representative Jamieson Greer and other U.S. officials to engage in follow-up negotiations on the July trade deal.

The U.S. is a top auto export market for South Korea. Of South Korea’s total car exports last year, exports to the U.S. were tallied at $34.7 billion, or 49.1 percent. Hyundai Motor Group and GM Korea exported around 970,000 and 410,000 units to the U.S., respectively, last year.