Gov't braces for economic fallout from Trump policies as biz sector expresses cautious optimism

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Gov't braces for economic fallout from Trump policies as biz sector expresses cautious optimism

Published: 07 Nov. 2024, 18:23

JIN EUN-SOO
[email protected]

Audio report: written by reporters, read by AI

From left, Foreign Affairs Minister Cho Tae-Yul, Finance Minister Choi Sang-mok and Industry Minister Ahn Duk-geun head for a meeting in Seoul on Thursday to discuss an agenda related to the election of Donald Trump as U.S. president the day before. [YONHAP]

Korea is on heightened alert with Donald Trump set to return to the White House, stirring concerns over potential shifts in trade and investment between the two countries.

"If the policies that President-elect Trump has been emphasizing become a reality, they will significantly impact our economy," said Finance Minister Choi Sang-mok in a meeting with key economic officials on Thursday.

"The government will make the ministerial meeting on the economy a pan-government control tower to respond proactively and thoroughly."

Trump's campaign has proposed a universal base tariff of at least 10 percent on all imports, a policy expected to hit Korea's export-driven economy hard. The Korea Institute of International Economic Policy estimates that such a tariff could reduce exports by up to $44.8 billion.

Korea's auto and chip industries also face potential challenges if Trump adjusts the Inflation Reduction Act and CHIPS and Science Act that promise substantial subsidies to Korean companies that make production facilities on U.S. soil. The president-elect has emphasized that the funds could be redirected for other uses.

Industry Minister Ahn Duk-geun also held a meeting with the heads of major business organizations in Korea on Thursday to strategize against potential risks from the incoming administration.

"[Korea] will fortify a cooperative relationship and relieve uncertainties in regard to issues related to the United States based on countermeasures we have come up with for various scenarios and on past experiences in handling various trade issues," Ahn said.

"We will hold discussions with the U.S. government and key figures so that our opinions can be substantially reflected when changes in policy are expected in the upcoming Trump administration."

Trade Minister Cheong In-kyo also held an emergency meeting on Wednesday evening, right after the election result became official, going over Trump's key campaign pledges in chips, autos, batteries and steel.

The Industry Ministry established a task force in March to monitor election trends and discuss possible risks.

Such risks were alluded to in congratulatory messages sent by Korea's major business organizations to President-elect Trump that expressed rather cautious tones.

"We expect [Trump's administration] to foster a friendly investment and trade environment so that Korean companies, which are the main pillar of the two countries' economic relationship, can continue with their U.S. investments and deals," said the Federation of Korean Industries in a message Thursday.

"We hope to further fortify the Korea-U.S. relationship and expand the two countries' cooperation based on Free Trade Agreement partnerships."

The Korean Chamber of Commerce and Industry (KCCI) said it expects "directions" to be suggested by the Trump administration in the face of global economic uncertainties.

"Recently, Korean companies have been contributing to U.S. employment and the diversification of its industries through active investments in a range of fields including chips, batteries and other high-tech industries," the KCCI said.

"We hope such effort from Korea can lead to bigger economic results for the two countries as the cooperative relationship continues during a second Trump administration as well."

James Kim, chairman and CEO of the American Chamber of Commerce in Korea, said he was "confident" that the collaborative relationship between the two countries "will further reinforce the U.S.-Korea alliance, which stands as a model of resilience and shared values."

BY JIN EUN-SOO [[email protected]]