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Prepare for Trump 2.0’s ‘trade czar’

Published: 03 Dec. 2024, 19:41

Lee Joo-hyoung
The author is a professor at the University of Seoul Law School and a lawyer.

President-elect Donald Trump has chosen his longtime friend and billionaire-CEO of financial services firm Cantor Fitzgerald, Howard Lutnick, as his commerce secretary. The avid champion of trade restrictions and cryptocurrency portends the weaponization of tariffs as “a bargaining chip” to remake the global trading system in favor of U.S. interests envisioned by the president-elect. In announcing the nomination, Trump said Lutnick “will lead our Tariff and Trade agenda, with additional direct responsibility for the Office of the United States Trade Representative.”

Tom Horman, the head of the Immigration and Customs Enforcement under the first Trump presidency, has been assigned with the role of “border czar,” overseeing the southern and northern U.S. borders as well as deportation of all illegal aliens. While Horman takes charge of policing the flow of people, Lutnick will keep watch on the comprehensive borders of goods.

Lutnick has been advocating for Trump’s America First tariff plans throughout his campaign, calling levies an “amazing tool for the president to use” to protect American workers. The nomination proving Trump’s confidence in the tariff bludgeon implies an upcoming heavy use of import duties to pressure negotiating trade partners.

On the same day Trump announced his first commerce secretary, Republican Rep. John Moolenaar, chair of the House Select Committee on the Chinese Communist Party, motioned the “Restoring Trade Fairness Act” stripping China of Permanent Normal Trade Relations (PNTR), effectively upending a normal trade partnership with Beijing sustained for more than two decades since it joined the World Trade Organization in 2001. The legislation can give the Trump administration the liberty to use tariff ammunition against China and materialize Trump’s threat of pushing up the levies on Chinese imports to 60 percent, as it can allow minimum 100 percent ad valorem tariff for all strategic goods and minimum 35 percent ad valorem for non-strategic goods.

The idea has bipartisan backing. The U.S.-China Economic and Security Review Commission (USCC), an independent arm of the Congress, in its annual report on U.S.-China trade unanimously endorsed revoking the PNTR status on China. The barrage of tariffs aimed at China inevitably will land on even the allies in the global trade battleground.

Trump and his hard-line commerce chief herald sweeping changes in U.S. trade strategy and policy. They are declaring the “return of tariffs” whose role diminished amid the evolution of the digital age and expansion of free-trade network. The president-elect has been articulating comprehensive tariff policy on both friends and foes to level the playing field with key traders. It is part of his America-First agenda to revive the U.S. manufacturing industry and correct trade practices.

The rise of a trade czar spells a tough test for trade-reliant Korea. Seoul has been devoted to expanding its FTA latitude and economic prosperity hinging on tariff-free calculus over the last 20 years. It now must map out measures to mitigate the impact under omnipotent tariff regime. Policymakers must try to come up with inventive strategies by thinking out of the box.

The bilateral FTA with the United States formalized in April 2007 went into effect in March 2012. Authorities must be thoroughly ready when they are called up to the negotiating table. Instead of working on a defense strategy to respond to demands from Washington, Seoul must come up with an offensive game plan by readying what it should ask.

Seoul needs to contemplate what and how much it can compromise to the U.S. demands. Policymakers must study what the Korean industry needs most to survive in the protectionist trade environment to make a strong argument to defend our supply interests.

Seoul must unite to achieve strong policy results. The trade representative has the utmost important role. If our trade command is backed by organizational strength and inventive trade strategies, it can surely find opportunities in the challenging contest no matter how menacing the opponent may be.

Translation by the Korea JoongAng Daily staff.