Protectionist rhetoric surrounding Donald Trump's victory in the U.S. presidential election and political uncertainties due to a corruption scandal involving President Park Geun-hye are weighing on the already fragile South Korean economy, analysts said Monday.

Experts say that South Korean automakers that produce cars in Mexico will suffer if the incoming U.S. president imposes heavy tariffs on South Korea, which now enjoys none thanks to the North American Free Trade Agreement. Trump has pledged to renegotiate the terms of the agreement with NAFTA partners, possibly imposing a duty of 35% on vehicles imported to the U.S. from Mexico.

"We assume that [South] Korean automakers and component makers will have to absorb the potential tariff hike, rather than passing it on to the end customers," said Chung Sung-yop, an analyst at Daiwa Capital Markets. "Kia Motors should bear the brunt the most given its highest revenue exposure to U.S. exports (18.3%)."

Kia is not alone. Samsung Electronics and LG Electronics also operate home appliance factories in Mexico, exporting most of the resulting products to the U.S. and benefiting from no tariffs.

Samsung is considering building home appliance plants in the U.S. if the country imposes heavy tariffs on products coming from Mexico, while LG is adopting a wait-and-see approach until Trump makes his trade policy clear. Posco, which runs four steel plants in Mexico, is also concerned about the potential changes, worrying that the new policy will cool demand for its product from automakers in the country.

Economists predict that if Trump does fulfil his campaign promises, it will negatively affect the South Korean economy as a whole.

"If the U.S. pushes for protectionism, [South] Korea's exports to the country will decline from the second half of next year," said Lim Dong-min, an economist at Kyobo Securities. "In 2018, the country will suffer from negative growth in all areas, except consumption and government spending."

Meanwhile, the scandal surrounding South Korea's President Park is adding to uncertainty in the country. State prosecutors claimed on Sunday that she had colluded with her longtime friend Choi Soon-sil to pressure conglomerates into "donating" billions of won to two foundations controlled by Choi.

The president's office refuted the claims, saying the investigation was unfair. It plans to cooperate with a new independent investigation instead, it said.

However, the scandal is crippling the government. Opposition parties are calling for the president to be impeached, and hundreds of thousands of people have been rallying on recent Saturdays in downtown Seoul, pressuring Park to step down.

(NAR)