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A 'bigger punch' from Trump's protectionism may benefit Korea: KIET

Published: 17 Feb. 2025, 17:46

SHIN HA-NEE
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U.S. President Donald Trump holds up a signed executive order in the Oval Office of the White House on Feb. 13. [AP/YONHAP]

U.S. President Donald Trump may escalate his tariff strategies with “a bigger punch,” warned Korea’s state-run think tank, while suggesting that Korea could emerge as a beneficiary of the rising protectionism.

The Korea Institute for Industrial Economics & Trade (KIET) released its analysis of the Trump administration’s America First Trade Policy on Monday, warning that the recently implemented measures — including 10 percent tariffs on all Chinese imports and 25 percent tariffs on steel and aluminum — might only be the beginning of a broader protectionist agenda.

“The second Trump administration’s tariff and trade policies are not one-off measures,” said KIET Vice President of Administration and Senior Research Fellow Lee Jun in the report.

The research institute noted that the restructuring of the international division of labor, led by the Trump administration, is advancing at a faster pace than anticipated, with the White House devising a comprehensive strategy to reduce the U.S. trade deficits.

Kyung Hee-kwon, a research fellow at the KIET and a co-author of the report, noted that the second Trump administration appears to be more determined and unified in its protectionist policy directions.

“Key cabinet members appear to be more aligned in their [policy] stances compared to the previous Trump administration,” said Kyung, “and it seems a consensus was reached that this would be the last opportunity to restore U.S. manufacturing and strengthen the middle class.”

While pointing out that no country would be immune to Washington’s protectionist measures, the KIET also stressed that Korea is in a more favorable position with its exports to the United States compared to its peers.

Washington could be less incentivized to impose additional barriers on Korea compared to bigger economies such as China, India and the European Union due to Korea's export-oriented nature and a resulting gap in the market, according to the KIET, which in turn may give the country a competitive edge through a trade diversion effect in the U.S. market.

“We should reflect on whether our countermeasures have been excessively focused on analyzing bilateral trade relations between Korea and the United States or on merely minimizing the damage to Korean companies,” said Kyung, adding that Korea should broaden its perspective in devising its trade strategies to incorporate the United States’ relations with other nations.

“We need to change this incoming tide and pressure from the Pacific into an opportunity to innovate and advance our industrial structure,” said Lee.

BY SHIN HA-NEE [[email protected]]