The Donald Trump administration’s decision on April 2 to impose a 25% reciprocal tariff on Korean products has sparked analyses predicting a devastating blow to the Korean-American economy.
With tariffs applied to virtually all items, including food products, industrial goods, and automobiles, businesses importing Korean goods are facing significant financial losses. In particular, Korean food items such as ramen, as well as clothing and cosmetics, are expected to see tariffs, leading to price hikes and reduced consumption among Korean-Americans. This raises concerns that the already struggling Korean-American economy will face even colder times.
According to the White House on April 3, President Trump announced the previous day in the Rose Garden that a 25% tariff would be imposed on Korean products.
The Trump administration’s reciprocal tariffs have effectively nullified the U.S.-Korea Free Trade Agreement (FTA), putting South Korea’s export sector on high alert. Businesses importing Korean products in the Americas are particularly alarmed, as tariffs—taxes imposed on goods from specific countries—are typically paid by importers.
Korean-American markets are also on edge. Thanks to the K-food boom driven by the Korean Wave, products like ramen, kimchi, snacks, drinks, and alcohol have gained popularity even in mainstream society, significantly boosting sales. However, tariff-driven price increases are expected to lead to reduced consumption. While some companies, such as Nongshim and Pulmuone, produce ramen and tofu in the U.S., the vast majority of Korean products are still imported from South Korea.
The tariff shock will not only affect Korean food but will also have a widespread impact on automobiles, electronics, and more. If South Korea’s economy deteriorates, it could weaken the won, potentially pushing the won-dollar exchange rate past 1,500 to as high as 1,600, according to some forecasts.
A report by the Korea Rural Economic Institute shows that the U.S. imported $1.59 billion worth of Korean agricultural and food products last year, a $280 million (21%) increase from the previous year. Among the imported items, ramen tops the list, followed by mixed prepared foods, other beverages, bakery products, and kimchi.
Jung Byung-mo, president of the LA chapter of the World Korean Business Association (OKTA LA), expressed concern: “Many businesses import clothing, accessories, and K-beauty cosmetics from Korea, and these tariffs will undoubtedly impact the Korean-American economy. For perishable food imports, the effects will be immediate.” Some predict that essential Korean grocery items like gochujang, ramen, and doenjang could see price increases of up to 30% or more, raising fears that small businesses may face a wave of bankruptcies in the worst-case scenario.
The greatest concern is that these reciprocal tariffs could plunge the U.S. economy into an irreversible downturn. The uncertainty caused by tariffs may lead companies to overhaul their business plans and consumers to keep their wallets shut. The National Retail Federation stated, “(Tariffs) will bring more anxiety and uncertainty to businesses and consumers.”
In particular, reciprocal tariffs are expected to have a severe negative impact on consumer prices. According to Yale University’s Budget Lab, if reciprocal tariffs are implemented and other countries do not impose retaliatory tariffs, the Personal Consumption Expenditures (PCE) price index could rise by about 1.7 percentage points. If retaliatory tariffs are introduced, the increase could reach 2.1 percentage points. Yale estimates that households could face an average annual loss of $2,700 to $3,400.
Consumer confidence is already waning. According to the University of Michigan, the final March consumer sentiment index was 57.0, the lowest in two years and four months since November 2022.
A Korean-American running a small business in LA’s Koreatown remarked, “It’s no exaggeration to say that the Korean-American economy in LA’s Koreatown has been in its worst state since the COVID-19 pandemic hit. With across-the-board taxation driving up prices, we’ll have no choice but to cut back on everything—shoes, clothes, dining out, buying new cars—for the entire four years of Trump’s term.”
[Reporter Park Hong-yong]