[Column] Between Coldness and Passion Toward Trump

On the 11th, a conference room in the FKI Tower in Yeouido, Seoul, was packed with representatives from various companies responsible for U.S. investment policies. It was the day when former heads of the Trade Negotiations Headquarters gathered to discuss the impact of the re-election of the American 'strongman' and possible response strategies. The 120 seats were fully occupied, and the attendees anxiously took notes on the experts' presentations.

The former negotiation chiefs made remarks such as, "What is happening now is completely different from what we have learned," "It is realistically difficult to repeal the Inflation Reduction Act (IRA). It may be reduced in the form of a 'skinny repeal' (partial repeal)," and "It would not be an easy choice for the U.S. to abolish or completely revise existing Free Trade Agreements (FTAs)."

Although these statements may seem unremarkable, the reason why so many corporate investment officials gathered is that it is difficult to predict the domestic economic outlook since the launch of Donald Trump's second administration. The sense of crisis that a preemptive barrier must be established against the impending trade storm brought them together in one place.

In fact, riding the 'Red Wave' and seizing both legislative and executive powers, Trump is expected to push stronger protectionism and a China decoupling policy with much greater power than during his first term. If the semiconductor support law (CHIPS Act) and IRA implemented by the Biden administration are repealed or reduced, it will inevitably harm our semiconductor, electric vehicle, and battery companies.

The universal tariff bomb is also causing fear among our companies. According to the Korea Institute for International Economic Policy (KIEP), imposing a 20% universal tariff would result in the loss of 8% ($44.8 billion) of exports and shrink the gross domestic product (GDP) by up to 0.67%. On this day, two questions were raised to the heads of the Trade Negotiations Headquarters, one of which was about the 'general impact of universal tariffs,' indicating how sensitively companies are responding to this issue.

For our export-driven companies, the Trump administration undeniably represents a continuous 'series of uncertainties.' However, it should be remembered that uncertainty does not necessarily lead to negative outcomes. It can be both a threat and an opportunity.

In particular, Korea will become a strong 'manufacturing partner' for the U.S. Former Trade Negotiations Headquarters chief Yeon Han-gu also said at this meeting, "When the U.S. tries to revive manufacturing, there are not many suitable partners." As one attendee recalled, "'There is no need to be too discouraged' is a phrase that stuck with me," making it a time to consider a 'win-win' approach.

Next month, executives from the four major conglomerates are scheduled to visit Washington D.C. to meet with political and business figures in the U.S. It is expected that corporate leaders will be able to grasp the key industrial and trade policies of the second Trump administration in advance during this meeting.

Of course, excessive optimism is not advisable. The attitude we must have now is a 'cool-headedness' toward the weapons Korea possesses and a 'passion' for smooth negotiations with our partners.