South Korean Won Falls Amid Tariff and Tax Uncertainty

The South Korean won weakened to around 1,400 per dollar on Friday, hovering at over eleven-week lows amid pressure from US trade actions and domestic tax reform concerns. The dollar held firm after President Trump reaffirmed a 10% baseline global tariff and up to 41% on non-trade partners, heightening trade tensions and prompting safe-haven flows into the greenback. Domestically, sentiment was weighed by the government’s plan to roll back recent tax cuts, raising doubts over its commitment to market reforms and efforts to address the Korea Discount. Meanwhile, July’s manufacturing PMI fell to 48.0 from 48.7 in June, marking a sixth straight month of contraction and signaling sharper deterioration in operating conditions as output and new orders declined. Firms also cited growing uncertainty from the US tariff risks. While exports rose a stronger-than-expected 5.9%, led by robust semiconductor demand, it was overshadowed by concerns over the broader industrial recovery.