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(Bloomberg) -- President Donald Trump pointed to South Korea as a country with more unfair tariffs against American products than China, while slamming the handing out of subsidies for foreign chipmakers like Samsung Electronics Co.
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“China’s average tariff on our products is twice what we charge them, and South Korea’s average tariff is four times higher,” Trump said in a speech to a joint session of Congress. “Think of that, four times higher, and we give so much help militarily and in so many other ways to South Korea, but that’s what happens. This is happening by friend or foe.”
Trump’s comments are likely to be a cause for concern for policymakers and businesses in South Korea as an indication that the president will eventually turn his focus to trade and security relations with Seoul.
South Korea’s currency briefly weakened against the dollar to about 1,460 won after Trump mentioned Seoul’s tariffs, before paring losses and then strengthening to around 1,450 late afternoon. Samsung shares finished the day down 0.9%.
The president also mentioned Mexico, India and other nations with trade surpluses with the US that impose duties on American products. Still, his comments underscore the high level of unfairness he feels toward South Korea, a supplier of everything from automobiles to semiconductors to the US.
In a statement after Trump’s speech, South Korea said its effective tariff on US imports amounted to 0.79% last year due to a free trade deal that came into effect in 2012 between the two nations. Its tariffs would be four times higher only if a rate among World Trade Organization members is applied, but that isn’t the case under the bilateral agreement, according to the statement.
Bloomberg Economics estimates that the mere threat of US tariffs could trim 0.8% from South Korea’s gross domestic product this year, with the impact concentrated in the second half.
South Korea may face other issues with Trump’s administration, too. Seoul relies on security guarantees from Washington to deter North Korean aggression. Trump last year referred to its ally as a “money machine” as he reiterated his demand that South Korea shoulder more of the upkeep for American troops stationed on the Korean Peninsula.