2025 US-China Trade War Analysis: Trump Tariff Policy Impact on Korean Economy
Table of Contents
- 2025 US-China Trade War Current Status
- Background of Trump's 50% Steel Tariff Increase
- China's Rare Earth Export Restriction Strategy
- Impact Analysis on Korean Economy
- Global Economic Outlook and Investment Strategy
2025 US-China Trade War Key Summary
🔥 Breaking Update: As of June 3, 2025, President Trump announced doubling steel tariffs from 25% to 50%. US-China trade conflict has reached historic highs.
Key Indicators Status
- US → China Tariffs: Average 51.1% (Record high 145%)
- China → US Tariffs: Average 32.6% (Record high 125%)
- Korea Target Tariffs: 26% imposed
- Japan Target Tariffs: 24% imposed
- US Household Burden: $1,200 additional tax effect annually
1. 2025 US-China Trade War Current Status
1.1 Comprehensive Analysis of Trump Tariff Policy
The 2025 US-China trade war has escalated to the largest scale in history. Trump administration's "Liberation Day" policy has caused US average tariff rates to surge from 2.5% to 27%, the highest level in 100 years.
Tariff Status by Country
| Country | Tariff Rate | Major Items |
| China | 51.1% | All products |
| Korea | 26% | Steel, Automobiles |
| Japan | 24% | Steel, Automobiles |
| EU | 20% | All products |
1.2 China's Retaliatory Tariffs and Rare Earth Sanctions
China is implementing comprehensive retaliation measures against US tariff increases:
Economic Retaliation Measures:
- 34% additional tariffs on US agricultural products
- 15% tariffs on energy (coal, LNG)
- 16 US defense companies included in sanctions list
Strategic Retaliation Measures:
- Rare earth export halt: 7 types including samarium, gadolinium, terbium, dysprosium
- Cutting military-use critical material supply chains
- Controlling materials essential for F-35 fighter jet production
2. Background of Trump's 50% Steel Tariff Increase
2.1 US Steel Industry Protection Policy
Reasons why President Trump is increasing steel tariffs to 50% from June 4:
Political Objectives:
- Fulfilling 2024 election promises
- Rallying Rust Belt regional supporters
- Strengthening "America First" policy
Economic Objectives:
- Enhancing US steel industry competitiveness
- Countering Chinese dumping exports
- Creating domestic manufacturing jobs
2.2 Global Steel Market Ripple Effects
Major Affected Countries:
- Canada: Largest steel importer to US (6.6 million tons annually)
- Brazil, Mexico, Korea, Vietnam: Top 5 import sources
- Germany: European steel companies face direct impact
3. China's Rare Earth Export Restriction Strategy
3.1 Severity of Rare Earth Weaponization
China's rare earth export controls have devastating impact on global high-tech industries:
Rare Earth Dependency:
- China Market Share: 70% extraction, 90% processing
- US Dependency: 80% of rare earth imports from China
- Key Uses: Electric vehicles, smartphones, wind power, military equipment
3.2 Alternative Supply Chain Construction Plans
Short-term Response:
- Securing alternative suppliers: Australia, Vietnam, Brazil
- Optimizing existing inventory management
- Expanding recycling technology investment
Medium-long term Strategy:
- Building domestic rare earth processing facilities
- Developing alternative material technologies
- Expanding strategic reserves
4. Impact Analysis on Korean Economy
4.1 Impact by Major Korean Industries
🏭 Steel Industry
- Hyundai Steel: $5.8 billion Louisiana plant investment (2029 operation)
- POSCO: Considering equity investment in Hyundai Steel plant
- Short-term Shock: Sharp decline in US export competitiveness
🚗 Automotive Industry
- Hyundai Motor Group: Need to expand local US production
- Tariff Burden: 25% auto tariff + 26% general tariff
- Supply Chain Restructuring: Strategy utilizing Mexico, Canada production bases
💾 Semiconductor Industry
- Samsung Electronics, SK Hynix: Accelerating US plant investment
- Memory Semiconductors: Relatively limited tariff impact
- System Semiconductors: Need to reduce China foundry dependency
4.2 Korean Government Response Strategy
Negotiation Strategy:
- Preparing trade package within 90-day tariff suspension period
- Securing USMCA-like exception clauses
- Proposing expanded energy and agricultural imports
Economic Policy:
- Supporting supply chain diversification
- Enhancing advanced technology self-reliance
- Strengthening SME export support
5. Global Economic Outlook and Investment Strategy
5.1 Second Half 2025 Economic Forecast
📊 Major Economic Indicator Predictions
- US GDP: 1.6% growth (0.3%p downward revision)
- China GDP: 4.5% growth (below government target of 5%)
- Global Trade: 0.2% decrease
- Inflation: US PCE 2.7% increase
5.2 Sector Outlook for Investors
🟢 Beneficiary Sectors
- US Steel Stocks: Improved profitability from tariff protection
- Rare Earth Alternatives: Battery materials like lithium, nickel
- Gold: Record highs due to safe asset preference
🔴 Affected Sectors
- Global Logistics: Demand slowdown from reduced trade volume
- Chinese Export Companies: Margin pressure from tariff burden
- Automotive: Increased supply chain costs
5.3 Korean Investor Portfolio Strategy
Expanding Safe Asset Allocation:
- Hold 25%+ in government bonds, gold, dollars
- Utilize volatility hedging products
Growth Engine Discovery:
- Competitive industries like K-battery, K-bio
- Companies expanding into Southeast Asian markets
- Digital transformation beneficiaries
US-China Trade War Related FAQ
Q1. How long will Trump's tariff policy continue?
Considering President Trump's past statements and policy consistency, this should be viewed as a structural change. His protectionist beliefs since the 1980s have been realized, making short-term resolution unlikely.
Q2. How should Korean companies respond?
Supply chain diversification is key. Limit single-country dependency to below 25% and expand local production in major markets. Alternative technology development to reduce dependency is also necessary.
Q3. What strategy should investors take?
Combine defensive portfolios with selective growth stock investment. Increase safe asset allocation while seeking investment opportunities in trade war beneficiary sectors or alternative supply chain construction companies.
Conclusion: Survival Strategy in the US-China Trade War Era
The 2025 US-China trade war signifies fundamental change in global economic order. Beyond simple tariff disputes, rare earth weaponization, supply chain restructuring, and technology decoupling are occurring simultaneously.
Korea needs strategic autonomy-based balanced diplomacy and enhanced economic security capabilities. Companies require supply chain diversification and technology innovation, while investors need strategic approaches for risk management and opportunity capture.
This analysis is based on the latest information as of June 3, 2025. Continuous monitoring is necessary considering the rapidly changing situation.