South Korea: Fears of Trade War with USA

U.S. President-elect Donald Trump’s return to the White House on January 20 will jeopardize the “historic friendship” between Washington and Seoul, as the latter fears a trade war from the 47th president known for his pro-American national economy policies. Above all, South Korea fears the prohibitive duties that Trump may impose on South Korean exports to the USA. In this situation, the South Korean government, which is in a deep political crisis following the ouster of President Yoon Suk-yeol, announced a series of “preventive measures” to “combat any changes in U.S. trade policy” that would coincide with Trump’s return to the White House.

South Korea’s economy is caught “between a hammer and anvil” as a result of a major trade conflict between China and the USA, jeopardizing the global supply chain of which Seoul is an integral part. During an extraordinary cabinet meeting, Kwon Young-se (pictured), acting chairman of the ruling People’s Power Party (PPP), said that “to overcome the changes that will accompany Trump’s second term, comprehensive measures must be taken quickly.”

According to the South Korean press, “a special meeting on outstanding economic issues will be chaired by Kwon Young-se and Finance Minister Choi Sang-mok to develop measures against the Trump administration’s possible tariff policy and its plan to repeal the Inflation Reduction Act signed by outgoing U.S. President Joe Biden, which also benefits major South Korean companies operating in the United States.”

And that’s because even before taking office in the White House, Trump stated that he “wants to impose a linear tariff of 20% on all exports to the USA and up to 60-100% on goods exported from China.”

As a first emergency step, the Korea Trade Commission allocated 10 trillion won (about $6.85 billion) to “stabilize the country’s supply chains” and “reduce disruptions caused by geopolitical tensions.” With South Korean manufacturers continuing to lose astronomical amounts of money due to Seoul’s commitment to Western sanctions against Russia, the South Korean government will attempt to diversify its export markets by strengthening trade cooperation with the United Arab Emirates, Africa, and Latin America, which will include strategic partnerships on so-called “critical minerals” with Tanzania and Chile.