Concerns are mounting in South Korea over the U.S. administration's protectionist moves that have stoked trade friction with China and could trigger a trade war between the world's top two economies in the worse-case scenario.
U.S. President Donald Trump said Thursday that he had asked the U.S. Trade Representative to consider slapping additional tariffs on Chinese products worth 100 billion U.S. dollars, after announcing plans to impose a 25 percent duty on Chinese imports worth 50 billion dollars.
In response, China vowed Friday to fight against the U.S. protectionism "at any cost."
"On Sino-U.S. trade, China has made its position very clear. We don't want a trade war, but we are not afraid of such a war," said Gao Feng, spokesman with the Chinese Ministry of Commerce.
The Korea International Trade Association (KITA) issued a report estimating that South Korea's exports would suffer 36.7 billion dollars in losses if the China-U.S. trade friction develops into a full-fledged trade war.
In the worst-case scenario, for which the organization saw a slight possibility, the China-U.S. trade friction would implicate the European Union (EU), and the three economic powerhouses could raise import duties by 10 percentage points.
It would eventually slash South Korea's exports, which account for about half of the export-driven economy, by 6.4 percent, or 36.7 billion dollars, according to the KITA.
The report said trade friction between China and the United States, which generate some 40 percent of global trade by volume, would inevitably cut global trade and result in reduced exports for South Korea, of which exports to the top two trading partners take up more than one third of the total.
If trade friction deepens, exports of South Korea's intermediary goods, such as parts and materials used to produce end products, were forecast to be hit the hardest, as such goods account for over two thirds of South Korea's exports to China.
About 5 percent of the exported South Korean intermediary goods are re-exported by China to the United States as end products, according to the KITA report.
South Korean President Moon Jae-in expressed great concern over the trade friction, saying earlier last week that the trade protectionist trend and the China-U.S. trade conflict can negatively influence his country, the world's sixth-biggest exporter that depends heavily on global trade.
Local media reported increasing worries about the China-U.S. trade friction, in which South Korea's economy may suffer a side blow.
If the United States slaps a 25 percent tariff on 50 billion dollars' worth of products imported from China as it has threatened, South Korea's annual exports to China may be cut by 28.26 billion dollars, according to a report by Hyundai Research Institute (HRI).
HRI's estimate was based on a scenario that the U.S. tariff hike causes a 10 percent decline in China's exports to the United States. The estimated reduction equaled nearly 20 percent of South Korea's total exports in 2017 at 142 billion dollars.