The central bank predicts that the 15 percent reciprocal tariff on exports to the U.S. will slow down the nation’s growth this year by zero-point-45 percentage point.

In a report issued Thursday, the Bank of Korea(BOK) said the tariffs can be expected to lower the rate of gross domestic product growth by zero-point-45 percentage point this year and zero-point-six percentage point in 2026.

The BOK cited as the biggest reason an expected slowdown in exports due to reduced shipments to the U.S., most notably of steel, automobiles and machinery.

The central bank also pointed to uncertainties surrounding trade negotiations between the U.S. and China, and Washington’s item-specific tariffs on semiconductors and pharmaceuticals.

It added that a major market disruption may take place in the domestic industrial ecosystem if exports from other countries initially headed to the U.S. are redirected to South Korea.