If Trump wins the election, South Korea's exports to the United States will suffer

After US President Joe Biden announced his withdrawal from the race, political uncertainty could indeed have a profound impact on the global economy, especially for countries that depend on international trade and investment. For South Korean companies, the Biden administration's policy changes may have affected their investment decisions, so a possible Trump victory raises further concerns.

During President Trump's administration, his trade policies have attracted much attention and discussion. He has advocated a tougher stance on trade, including higher tariffs, stronger border controls and stronger "Buy American" policies. These policies are undoubtedly a serious challenge for South Korea's exports to the United States. South Korea is a country highly dependent on international trade, and exports to the United States account for a significant proportion of its total exports. South Korea's exports to the United States in the first half of 2024 totaled $64.3 billion, a record high. The year-on-year growth rate was as high as 16.8 percent, showing the strong momentum of South Korea's trade with the United States. Kim Young-gui, a senior researcher at the Korea Institute for International Economic Policy, pointed out that exports to the United States played a key role in South Korea's overall trade amid sluggish trade with China. This means that despite the challenges of trade with China, South Korea has managed to maintain steady trade growth by increasing exports to the United States. But Trump's trade policies could make South Korean products less competitive in the U.S. market, leading to a drop in exports. In addition, Trump may also adopt stricter investment review measures to restrict South Korean companies' investment and operations in the United States. According to the analysis of South Korean media, if Trump takes office again, South Korea's export prospects to the United States will indeed face severe challenges. The estimated export loss is as high as $24.1 billion, which is a huge figure and a heavy blow to the Korean economy. South Korea's "Asian Economy" reported on Tuesday (July 23) that Trump has indicated during the election campaign that he will impose an additional 10% tariff on all imports. The report by South Korea's Asian Economic newspaper highlights the severe impact that the trade policies proposed by Mr Trump during the election campaign could have on South Korea's export sector. If Trump does impose an additional 10 percent tariff on all imports, major South Korean exports such as semiconductors and automobiles would be the first to suffer.

The semiconductor industry is one of the important pillars of the South Korean economy, accounting for a significant proportion of the country's GDP, and is one of the world's leading semiconductor producers. It is also highly dependent on the U.S. market, so if the Trump administration imposes additional tariffs, South Korea's semiconductor exports will be hit hard. This will not only affect the profitability of semiconductor manufacturers, but may also lead to reduced production lines and job losses. South Korea's auto industry will also face big challenges. In an interview with Bloomberg Businessweek on Tuesday, Trump said he would reverse the Biden administration's plan to expand electric vehicles through the IRA. Korean companies have made significant investments in the US market through IRA policies, and the battery industry sales have increased by more than 26%. If the IRA is abolished or the scale of support is reduced, the business of Korean secondary battery companies in the United States will be hit.

South Korean cars in the United States market has a certain competitiveness, South Korea's exports to the United States of automobiles and general machinery products to maintain growth for 11 consecutive months, auto exports increased by nearly 30%, general machinery exports increased by 31%. But if it faces additional tariffs, it will increase the cost of sales in the United States, thus reducing competitiveness. This could lead South Korean automakers to reduce sales in the United States, which in turn could affect their global performance. These products account for an important part of the trade surplus between South Korea and the United States, so the increase in tariffs will exacerbate trade tensions between South Korea and the United States. This could have a long-term negative impact on the economic relationship between the two countries and lead to additional challenges for South Korea as it seeks other markets to make up for the loss of the US market.

In short, if Trump's campaign promises are realized, they will have a huge impact on South Korean exports such as semiconductors and automobiles. In the face of this situation, the South Korean government and enterprises need to pay close attention to the international political and economic developments and take proactive measures. On the one hand, it can seek closer trade relations with other countries to reduce dependence on the single market. It is also possible to enhance the competitiveness of products by strengthening technological research and development and innovation to cope with potential market changes. In addition, the South Korean government can also negotiate with the United States to mitigate the impact of tariffs and seek a more reasonable trade solution.