Is Korea prepared for Trump 2.0?
Choi Byung-il
The author, a professor of economics at the Ewha Womans University Graduate School of International Studies, is president of the Korea Foundation for Advanced Studies.
With less than a year left before the next U.S. presidential election on Nov. 5, the Trump scare sweeps free democracies of the world. The fear about the former president’s possible return is growing bigger after recent polls show Trump leading current President Joe Biden.
Donald Trump bewildered America’s traditional allies like Europe, Korea and Japan by flexing U.S. muscles based on unilateral foreign and trade policy during his reign from January 2017 to January 2021. A tense moment captured during the G7 Summit in Canada in June 2018 epitomizes the fledgling schisms between the United States and Europe. In that photo, German Chancellor Angela Merkel and French President Emmanuel Macron — both putting their hands on the table — squarely confront Trump who stares at them with his arms folded.
If Trump is re-elected, it not only means a return to the unrivaled chaos in U.S. politics, but also signifies an end to the value-oriented diplomacy the Biden administration has been pushing. The Yoon Suk Yeol administration has endeavored to weather the turbulent new Cold War by restoring the gloomy South Korea-Japan relations, strengthening the Korea-U.S. alliance, and establishing a tripartite coalition with the U.S. and Japan. That strategy of the Yoon administration will be tested by Trump if he comes back. Is Korea prepared for the storm?
Trump’s second term denotes a high wall erected before the Korean economy heavily relying on trade to survive. His worldview and past trajectory portend gloom. During his 2016 presidential campaign, Trump vowed to Make America Great Again (MAGA) by recovering the glory of U.S. manufacturing — like the steelmaking and automaking industries — which helped America outpace the mighty United Kingdom between the late 19th and early 20th century. After being elected president, Trump scrapped the Korea-U.S. Free Trade Agreement — often praised as a win-win case in bilateral trade relations — just because Korea’s car exports to the United States outweighed exports in the other direction. The North American Free Trade Agreement (Nafta) was also thrown into the trash bin. The Trans-Pacific Partnership (TPP) the Obama administration struggled to forge with 11 other Pacific Rim economies in order to disallow China from writing international trade rules will most likely face a similar fate if Trump is re-elected. Conventional trade policy based on comparative advantage — for instance, increasing exports of America’s competitive services while expanding imports of others’ competitive steels and cars for a win-win outcome — became just a laughing stock for the egomaniac. During the 2016 campaign, Trump claimed that the theory of comparative advantage will only make the elites even more powerful and give more frustrations to factory workers in the Midwest. Even the workers who had voted for the Democrats in past elections supported Trump in the last presidential election.
Trump’s presidency 2.0 points to MAGA 2.0. Inarguably, his economic viewpoint is outmoded. If he takes ECON 101, his answer sheet will most likely get an F. Protecting U.S. manufacturing jobs by raising tariffs on imports to help fatten state coffers is just an illusion.
Lifted tariffs will surely protect some related jobs. But import prices rising as much as the tariffs will surely torment customers. The debate over the efficacy of protecting domestic industry through tariffs already ended in the latter half of the 20th century. Countries who started industrialization later than the West attempted to protect their industry by using tariffs as a weapon. But if a tariff was their only weapon, they all failed. Only countries that bolstered their global competitiveness through innovation and challenge survived, as succinctly illustrated by Korea’s case.
The U.S. steel and car industries cannot be protected by tariffs alone, because their innovation — and challenging spirit — are lagging behind other countries. U.S. politicians and trade officials were busy attacking other countries for engaging in unfair competitions, rather than correcting their own weaknesses. You cannot put the blame on Trump alone, as the history goes back to the 1980s, when America’s trade offensive against Japan reached its peak.
If Trump, who called himself “Tariff Man,” makes a comeback, U.S. tariffs on all imports will go up. He had pledged it. For the former president who cherished his image as “the best negotiator” throughout his life, raising tariff rates will not be his ultimate goal. Instead, he wants to get big concessions from foreign countries by using that tariff card when they want to enter the largest U.S. market. That’s why Trump steadfastly upheld the value of “fair trade” based on the principle of reciprocity during his first term. But the problem is that Trump has the power to determine if it is a “big concession” or not.
Any lectures will not work for Trump who blindly prioritizes export over import under the potent spell of mercantilism. Upon hearing the news about Trump’s election as U.S. president in November 2016, the late Japanese Prime Minister Shinzo Abe sensed impending doom for the Trans-Pacific Partnership he had staked all to help resuscitate the struggling Japanese economy through the multilateral platform. Abe immediately flew to Trump Tower in New York to meet the president-elect to make the TPP stay afloat, but Trump decided to withdraw from the partnership on his first day in the White House. Trump’s signature alone was enough to make America break away from the TPP.
Trump elevated tariffs on all steel imports based on the logic that they endanger U.S. national security. He did not care about the EU’s complaints and diplomatic offensives at the strange reasoning or about the criticism from academia or the press. Trump even threatened to escalate tariffs on all car imports. Trump 2.0 connotes a rerun of such anachronistic dramas. Is Korea ready for an even higher wall built around America?
Biden is also on a crusade to revive the traditional U.S. manufacturing space which has lost its competitive edge. His Build Back Better (BBB) is no different from Trump’s MAGA in essence. But a decisive difference between the two is that Trump is simply dismissing traditional U.S. allies — as if they were just pawns on a chess board. He said that the EU, Japan and Korea, which give a trade deficit to the U.S., are worse than dictators like Xi Jinping, Vladimir Putin and Kim Jong-un.
The way Trump behaved shows his conviction that the U.S. must put more pressures on China. The tariff bomb he dropped on China triggered the U.S.-China trade war, which prompted the new Cold War in the 21st century. Trump also started holding China in check for its rise as a technology behemoth, as exemplified by the restrictions on Huawei. But Trump has no interest in joining forces with allies to pressure China. Why should the U.S. raise their value even when America can pressure China on its own? Trump is still dominated by his unparalleled instinct for calculation as a businessperson.
If Trump returns to the White House, the Korea-Japan relations — the weakest link in the trilateral Korea-U.S.-Japan ties — will be at a crossroads. If Trump’s presidency 2.0 represents a fortification of the wall surrounding the U.S., Korea must go into the fortress early on — or build an effective ladder to go over the wall. Could Korea make the ladder on its own or should it unite with other countries under the same situation? If Korea chooses the latter path, which countries should it partner with? But even if Trump’s second term begins, it does not mean the end of the world. Korea must devise farsighted strategies to survive Trump 2.0 and beyond. If the Yoon administration takes a romantic approach to the challenges of international relations based on the harsh give-and-take rule, it will only mean the beginning of a tragedy.
Translation by the Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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