[New York Diary] Growing Trump Risk, Korea's Laid-Back Response

"Former President Donald Trump's view that the U.S. trade deficit problem must be resolved is close to a conviction."

This was said by a former trade official I recently met in Washington D.C., who shared stories about meeting White House officials during the Trump administration. It was said that in the pre-briefing materials prepared by White House aides before calls or meetings with other national leaders during Trump's presidency, there was always one essential piece of information included: whether the country had a trade surplus or deficit. After the country name and basic information, the trade balance was always listed. If the U.S. had a trade surplus with that country, the briefing atmosphere remained positive throughout, but if the country ran a trade deficit, discussions about ways to resolve the deficit were inevitably part of the briefing.

Trump's awareness of the trade deficit issue dates back to the 1980s. It is reported that while conducting real estate business in New York, Trump personally funded full-page newspaper ads in The New York Times (NYT), The Wall Street Journal (WSJ), and The Washington Post (WP), highlighting the U.S. trade deficit problem. Not a politician but a businessman, he placed ads under his own name, criticizing the severe trade deficit with Japan and expressing a critical stance on free trade. Considering that Trump invested his own money to raise his voice on trade issues, his determination to solve this problem as president is regarded as based on a firm conviction beyond mere policy judgment.

[Image source=Yonhap News]

With former President Trump confirmed as the Republican candidate for the upcoming November presidential election, concerns about the 'Trump risk' are growing. South Korea's trade surplus with the U.S. last year was $44.5 billion (approximately 60 trillion KRW), the highest ever. For a country like Korea, where 40% of GDP comes from exports, the uncertainty and impact following Trump's election, which signals stronger protectionism, are considerable. Fortunately, Korea has experience from Trump's first term. Korea is familiar with Trump's negotiation style through issues such as renegotiating the Korea-U.S. Free Trade Agreement (FTA) and the Section 232 steel export restrictions. Korea has the experience and know-how to identify its weaknesses and strengths that could be attack points and to establish response plans for various scenarios.

However, compared to Japan, which is swiftly preparing for the possibility of Trump's return to power, the Korean government still seems to lack urgency. Recently, the Japanese government signed a contract with a lobbying firm whose representative has been a close friend of Trump for 30 years. Japan is also pouring funds into lobbying efforts in the U.S. According to OpenSecrets, a bipartisan group tracking U.S. political funding, the Japanese government spent $49.34 million (about 66.5 billion KRW) on lobbying in Washington D.C. in 2023. This is four times the $12.08 million (about 16.3 billion KRW) spent by the Korean government. While Korea halved its lobbying expenditures last year, Japan increased its lobbying funds by 13.4%. Japan employed as many as 20 lobbying firms in Washington D.C., whereas Korea used only 5 firms, fewer even than Taiwan's 6. Although exports account for 40% of Korea's economy, twice that of Japan's, the government's response differs significantly. It is believed that the Korean government is not ignoring the possibility of a second Trump administration. However, there is no visible effort to actively engage with Trump's camp. Both the ruling party and government appear to be waiting for the April general election. There are only about six months left until the U.S. presidential election.