S.Korean, UK central banks warn of tariff impact on global economy amid US threats of steeper duties: reports
Bank of Korea in Seoul, South Korea File photo: VCG
The central banks of South Korea and the UK have warned of the impact of the US tariffs on the global economy, as the US administration threatened steep tariffs on eight more countries and plans to proceed with sweeping new import duties set to take effect on nearly every country starting August 1.
According to a monetary policy statement released by the Bank of Korea on Thursday, the bank stated that “starting with changes in external conditions, the global economy is expected to experience a gradual slowdown as the impact of high tariff rates begin to materialize amid prolonged uncertainties surrounding the trade environment.”
The Bank of Korea statement also predicted that in the US, “the economic growth rate is projected to temporarily rise in the second quarter due to front-loaded demand resulting from the imposition of tariffs, but the growth trend is expected to slow in the second half of the year.”
The South Korean central bank held interest rates steady at 2.5 percent on Thursday, noting that economic growth “is forecast to remain low for some time, and there is high uncertainty related to trade negotiations.”
South Korea’s real GDP, adjusted for inflation, marked the first downturn in the first three quarters of 2025 by contracting 0.2 percent compared to the prior quarter due to a slump in exports, consumption, and investment, central bank data showed at the end of April, the Xinhua News Agency reported.
Samsung Electronics, one of the country’s largest companies and a key player in the global semiconductor sector, said on Tuesday that it expected its second-quarter operating profits to fall by more than half, citing US export controls on advanced AI chips to China, according to a report by the channelnewsasia.com.
US President Donald Trump on Wednesday (US time) announced a second wave of tariff notices targeting US trading partners across Asia, Africa, and Europe, as his administration presses ahead with sweeping new import duties set to take effect on nearly every country starting August 1, according to Politico.
Additionally, the US announced a 50 percent tariff on copper imports on Wednesday, which will go into effect on August 1.
The statement by the Bank of Korea followed a similar warning issued by the UK central bank the previous day.
On Wednesday (UK time), the Bank of England said in its Financial Stability Report that it continued to see dangers from “geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt.”
The Bank of England report said near-term prospects for global growth have weakened, in part due to uncertainty surrounding global trade policies.
Despite progress in trade talks with some countries, there remains “considerable unpredictability” regarding the near-term evolution of global trade policies, with negotiations continuing between the US and several of its trading partners, the UK central bank said.
These developments are expected to weigh on global growth, driven both by the direct impact of higher tariff barriers and the dampening effect of trade policy uncertainty on firms’ investment decisions, the UK central bank added.
Li Tianguo, a deputy director with the Department of Emerging Economies at the National Institute of International Strategy, told the Global Times on Thursday that the US administration’s adherence to “America First” and its unilateralism, particularly in the imposition of tariffs, has significantly increased transaction costs for the vast majority of its trading partners.
Even its allies are experiencing severe impacts on their relevant export industries and view these tariffs as plunging the global economy into a state of perplexing uncertainty, Li said.
The two reports were echoed with similar concerns from central banks in Australia, Thailand and Vietnam, according to media reports.
Australia’s central bank is closely monitoring US tariff developments, Deputy Governor Andrew Hauser said on Wednesday, adding that there is an enormous amount of uncertainty in the global economy, Reuters reported on July 9.