New economic orderA global economic order marked by free trade, neoliberalism and globalization over the last three decades is in for drastic change under the leadership of U.S. President Donald J. Trump.
We need to come up with a new strategy to cope with such major changes in the global order. We may be left hanging on the sidelines if we do not act fast upon these changes in the stream of history. Japan and the members of the European Union have already begun assessing the repercussions on their economies to come up with new sets of responses.
But our hands are tied. Korea has no leader at the helm as a never-ending scandal threatens the very existence of the Park Geun-hye government. The government held a cabinet meeting on economic affairs, but came up with nothing beyond textbook-like rhetoric.
To lessen the risks to the domestic economy, we need to study the economic agenda of the U.S president-elect. There will be both risks and opportunities for the local economy and companies in such major changes. Trump’s economic platform under the “America First” slogan aims to restore the middle class and create jobs.
He proposes to bring down the corporate tax rate to 15 percent from 35 percent, invest $1 billion on public infrastructure projects, and rebuild the American manufacturing industry through deregulation and incentives to the Rust Belt, which was once a hub of U.S. industries.
Trump envisions doubling U.S. gross domestic product growth and restoring the superpower’s glory. If he pulls it off, his economic agenda could be as big as the New Deal Initiative of Franklin Roosevelt and bring back the boom years of the 1980s under President Ronald Reagan.
Another keystone of Trump’s economic agenda is a domestically protective trade policy. He has vowed to raise tariffs to 45 percent on Chinese imports and nullify the Trans-Pacific Partnership as well as existing North American Free Trade Agreement and Korea-U.S. Free Trade Agreement.
Ultimately, he wants to bring U.S. companies back to home to make products using American labor. Whether his vision can translate into any kind of reality remains uncertain.
But Washington is bound to clash with Beijing and Tokyo, which need to continue to sell their products to the American market to keep their economies afloat. Korea must find its own way forward and take preemptive actions.
JoongAng Ilbo, Nov. 12, Page 30
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