South Korea Aims to Delay US Tariffs in Talks, Cooperate in Mutual Areas 

Finance Minister Choi Sang-mok, who serves concurrently as deputy prime minister for economic affairs, speaks during a meeting of economy-related ministers at the government complex in Seoul, South Korea, 11 April 2025. (EPA/Yonhap) 
Finance Minister Choi Sang-mok, who serves concurrently as deputy prime minister for economic affairs, speaks during a meeting of economy-related ministers at the government complex in Seoul, South Korea, 11 April 2025. (EPA/Yonhap) 
TT
20

South Korea Aims to Delay US Tariffs in Talks, Cooperate in Mutual Areas 

Finance Minister Choi Sang-mok, who serves concurrently as deputy prime minister for economic affairs, speaks during a meeting of economy-related ministers at the government complex in Seoul, South Korea, 11 April 2025. (EPA/Yonhap) 
Finance Minister Choi Sang-mok, who serves concurrently as deputy prime minister for economic affairs, speaks during a meeting of economy-related ministers at the government complex in Seoul, South Korea, 11 April 2025. (EPA/Yonhap) 

South Korea will seek to delay the implementation of tariffs as long as possible in negotiations with the United States, its finance minister said on Tuesday, as Seoul targets cooperation in areas of mutual interest such as shipbuilding and energy.

Officials in Seoul have been scrambling to limit the damage to the export-reliant economy from the threat of looming duties.

South Korea is among the countries that US Treasury Secretary Scott Bessent has said Washington would sit down with to discuss the tariffs imposed by US President Donald Trump.

The priority was to delay the tariffs "as much as possible" to help reduce the uncertainty the country's businesses face in the global market, South Korea's Finance Minister Choi Sang-mok told parliament.

"From our national interest perspective, the idea is to negotiate as much as possible and wrap it up under the new government," he said in answer to a lawmaker's question about the direction of Seoul's response.

Trump hit Asia's fourth-largest economy with 25% "reciprocal" tariffs earlier this month as he targeted dozens of countries with import duties as high as 49%. He has since paused their implementation by 90 days but has maintained a 10% blanket tariff on all goods imports and ratcheted up levies on China.

The tariff shock comes as South Korea prepares to pick a new president in a snap election on June 3 after Yoon Suk Yeol was ousted this month over his short-lived martial law declaration.

While the power vacuum has raised questions about the mandate of acting President Han Duck-soo and the direction of its response to Trump's sweeping tariffs, Han's government has engaged with top US administration officials.

Han spoke to Trump last week in a phone call, while South Korea's top trade envoy met US Trade Representative Jamieson Greer to discuss lowering tariffs.

Trade and Industry Minister Ahn Duk-geun may travel to Washington next week for further talks, media reports said.

Choi said discussions between Trump and Han touched on the spirit of reaching a solution that meets the allies' mutual interests and includes cooperation in the shipbuilding sector and potential involvement in an Alaska gas pipeline project.

Seoul has previously indicated it was open to possible involvement in the gas project and that potential cooperation with Washington in the shipbuilding sector was a "very important card" in negotiations.

Trump's delay to some tariffs means the work of negotiating a trade arrangement to address the US president's claim of unfair trade will fall on a new South Korean president, who will take office immediately after the June 3 vote.

The tariff pause does not apply to the 25% duty that Trump imposed on steel and aluminium as well as vehicles.

South Korea is a leading global exporter of cars and steel to the United States.

Seoul announced on Tuesday an increase in its support package for its key semiconductor industry to 33 trillion won ($23.25 billion), amid growing policy uncertainty over US policies.

Trump said on Sunday he would be announcing the tariff rate on imported semiconductors over the next week, adding that there would be flexibility with some companies in the sector.



IMF Cuts Growth Forecasts for Most Countries in Wake of Century-High US Tariffs

International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
TT
20

IMF Cuts Growth Forecasts for Most Countries in Wake of Century-High US Tariffs

International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)

The International Monetary Fund on Tuesday slashed its growth forecasts for the United States, China and most countries, citing the impact of US tariffs now at 100-year highs and warning that rising trade tensions would further slow growth.

The IMF released an update to its World Economic Outlook compiled in just 10 days after US President Donald Trump announced universal tariffs on nearly all trading partners and higher rates - currently suspended - on many countries.

It cut its forecast for global growth by 0.5 percentage point to 2.8% for 2025, and by 0.3 percentage point to 3% from its January forecast that growth would reach 3.3% in both years.

It said inflation was expected to decline more slowly than expected in January, given the impact of tariffs, reaching 4.3% in 2025 and 3.6% in 2026, with "notable" upward revisions for the US and other advanced economies.

The IMF called the report a "reference forecast" based on developments through April 4, citing the extreme complexity and fluidity of the current moment.

"We are entering a new era as the global economic system that has operated for the last 80 years is being reset," IMF Chief Economist Pierre-Olivier Gourinchas told reporters.

The IMF said the swift escalation of trade tensions and "extremely high levels" of uncertainty about future policies would have a significant impact on global economic activity.

"It's quite significant and it's hitting all the regions of the world. We're seeing lower growth in the US, lower growth in the euro area, lower growth in China, lower growth in other parts of the world," Gourinchas told Reuters in an interview.

"If we get an escalation of trade tensions between the US and other countries, that will fuel additional uncertainty, that will create additional financial market volatility, that will tighten financial conditions," he said, adding the bundled effect would further lower global growth prospects.

Weaker growth prospects had already lowered demand for the dollar, but the adjustment in currency markets and portfolio rebalancing seen to date had been orderly, he said.

"We are not seeing a stampede or a run to the exits," Gourinchas said. "We're not concerned at this stage about the resilience of the international monetary system. It would take something much bigger than this."

However, medium-term growth prospects remained mediocre, with the five-year forecast stuck at 3.2%, below the historical average of 3.7% from 2000-2019, with no relief in sight absent significant structural reforms.

The IMF slashed its forecast for growth in global trade by 1.5 percentage point to 1.7%, half the growth seen in 2024, reflecting the accelerating fragmentation of the global economy.

Sharply increased tariffs between the United States and China will result in much lower bilateral trade between the world's two largest economies, Gourinchas said, adding, "That is weighing down on global trade growth."

Trade would continue, but it would cost more and it would be less efficient, he said, citing confusion and uncertainty about where to invest and where to source products and components. "Restoring predictability, clarity to the trading system in whatever form is absolutely critical," he told Reuters.

US GROWTH DOWN, INFLATION UP

The IMF downgraded its forecast for US growth by 0.9 percentage point to 1.8% in 2025 - a full percentage point down from 2.8% growth in 2024 - and by 0.4 percentage point to 1.7% in 2026, citing policy uncertainty and trade tensions.

Gourinchas told reporters the IMF did not foresee a recession in the US, but the odds of a downturn had increased from about 25% to 37%. He said the IMF was now projecting US headline inflation to reach 3% in 2025, one percentage point higher than it forecast in January, due to tariffs and underlying strength in services.

That meant the Federal Reserve will have to be very vigilant in keeping inflation expectations anchored, Gourinchas said, noting that many Americans were still scarred by a spike in inflation during the COVID pandemic.

Asked about the impact of any moves by the White House to remove Fed Chair Jerome Powell, Gourinchas said it was "absolutely critical" that central banks were able to remain independent to maintain their credibility in addressing inflation.

US stocks suffered steep losses on Monday as the US president ramped up his attacks on Powell, fueling concerns about the central bank's independence. Stocks opened higher on Tuesday.

US neighbors Canada and Mexico, both targeted by a range of Trump's tariffs, also saw their growth forecasts cut. The IMF forecast Canada's economy would grow by 1.4% in 2025 and 1.6% in 2026, instead of 2% growth projected for both years in January.

It predicted Mexico would be hard hit by tariffs, with its growth dipping to a negative 0.3% in 2025, a sharp 1.7 percentage point drop from the January forecast, before recovering to 1.4% growth in 2026.

LOWER GROWTH IN EUROPE, ASIA

The IMF forecast growth in the Euro Area would slow to 0.8% in 2025 and 1.2% in 2026, with both forecasts about 0.2 percentage points down from January. It said Spain was an outlier, with a 2.5% growth forecast for 2025, a 0.2 percentage point upward revision, reflecting strong data.

Offsetting forces included stronger consumption due to rising wages and a projected fiscal easing in Germany after major changes to its "debt brake." The IMF cut its growth forecast for Germany by 0.3 percentage point to 0.0% in 2025, and by 0.2 percentage point to 0.9% in 2026.

Growth in Britain would hit 1.1% in 2025, 0.5 percentage point below the January forecast, edging higher to 1.4% in 2026, reflecting the impact of recent tariff announcements, higher gilt yields and weaker private consumption.

Trade tensions and tariffs were expected to shave 0.5 percentage point off Japan's economic activity in 2025, compared to the January forecast, with growth projected at 0.6%.

China's growth forecast was cut to 4% for 2025 and 2026, reflecting respective downward revisions of 0.6 percentage point and 0.5 percentage point from the January forecast.

Gourinchas said the impact of the tariffs on China - hugely dependent on exports - was about 1.3 percentage point in 2025, but that was offset by stronger fiscal measures.