Squeezed in between whalesPARK HYUN-YOUNG
The author is a head of the JoongAng Ilbo’s global business news team.
A town in Missouri is feeling a mixed moment. A struggling aluminum plant has been helped by the U.S.’s high tariffs on imported steel and aluminum, and is hiring new employees. But nearby soybean farmers are sighing. After China has announced high tariff on beans from the United States, it won’t be easy to export their soybeans.
As the United States and China imposed high tariffs on goods exported by each other, a trade war has become a reality. This all-out tariff war will be the first in 88 years, since the United States put average tariffs of 59 percent on more than 20,000 imported goods in 1930. While the war is between the United States and China, most countries that trade with them are being hurt. The global supply network is entangled, and material and intermediary goods are exported and imported through various countries to make finished goods.
The ripples are especially significant since the war is between the United States and China, the world’s biggest and second-biggest economies. So many countries are caught between the battle of the two giants. Korea is a typical victim. Korea’s biggest export partner is China, and 79 percent of its exports are intermediary goods. Uncertainty grew as Uncle Sam announced its second tariff program. But it is difficult to predict their impact on Korean industry and economy.
Will Korea benefit if fewer American cars are sold in China? Will Korea be forced to import U.S. beef, as less of it will be imported to China? Will Chinese agricultural products flow into Korea instead of the United States? China is gathering friendly forces to stand up against the United States. What will Korea say if it is asked to take a side? The battle is not just about tariffs. The basis of the U.S.-China discord is Made in China 2025, China’s policy to nurture homegrown manufacturing. How will Korea respond to China’s technological development?
While fighting internally, Korea failed to see the fire spreading outside. The administration is focused on handling the confusion from the minimum wage increase and 52-hour workweek. It is the time for the government to answer the people’s questions. We cannot discuss our so-called inclusive growth strategy without trade, as Korea depends on trade.
JoongAng Ilbo, July 19, Page 30