[New Year Outlook from Ruling and Opposition Economic Experts] ③ Jo Jeonghun "Emergence of New Trade Order Inevitable... Must Find Economic Solutions"

Strengthening Trade Measures Against China and Allies, Global Trade Contraction
"Must Communicate Closely with the US to Prevent Regulatory Tightening"
"Petrochemicals and Others Pushed Out by China... Need to Improve Profitability"

"The emergence of a new international trade order is inevitable."

Jo Jeong-hoon, a member of the People Power Party who worked as an international economic development expert at the World Bank for 15 years, cited changes in the international trade order following the inauguration of the second Trump administration as the biggest crisis and variable for the Korean economy this year in a written interview with Asia Economy on the 2nd. He is scheduled to attend President-elect Trump's inauguration ceremony upon invitation from U.S. Senator Ted Cruz of Texas.

Jo pointed out that once the second Trump administration takes office on the 20th (local time), trade measures against China will be further strengthened, making a contraction in global trade an unavoidable constant. During Trump’s first term, U.S.-China competition escalated into a full-fledged trade dispute, with Trump imposing high tariffs on Chinese products, citing unfair trade practices by China and the U.S. trade deficit with China.

Yonhap News

He also saw a high possibility that the Trump administration would pressure allies through universal tariffs and other means by promoting stronger America First policies than during its first term. Trump has repeatedly declared, "Allies have used us for years. I will not tolerate them stealing our jobs and plundering us." South Korea’s exports to the U.S. last year reached $127.8 billion (approximately 188.76 trillion won), a 10.5% increase from the previous year, marking a record high and raising concerns that it could become a target of the Trump administration. Jo explained that in response, "We must maintain close communication with the U.S. to ensure that regulations on allies like South Korea do not also intensify."

On the other hand, he viewed the possibility of stabilizing the international situation due to the Trump administration’s inauguration as a positive factor. Trump pledged an early end to the Ukraine war and appointed former U.S. Vice President National Security Advisor Keith Kellogg as a special envoy for Ukraine and Russia after his election. Jo expressed hope, saying, "Once a new trade order is established and tensions in Ukraine, the Middle East, and the Taiwan Strait stabilize, the global economy will stretch and recover."

However, he also pointed out that improving corporate export competitiveness and recovering the domestic economy for small business owners and ordinary citizens must accompany this. Jo advised, "While the performance of semiconductors, electric vehicles, K-defense, and bio sectors is important, it is essential to enhance profitability in traditional manufacturing sectors such as petrochemicals, steel, and shipbuilding," adding, "To this end, support for corporate facility investment and structural reforms must be expanded." This reflects the need for the government and private sector to join forces to revitalize consumption and investment, as traditional manufacturing sectors like petrochemicals and steel are losing ground to competition from China.

As domestic variables, he cited interest rates and real estate price movements. Domestic political instability such as impeachment, domestic economic downturn, loan regulations, and external factors like the U.S. lowering its benchmark interest rate could affect South Korea’s real estate and interest rates. Jo said, "It is a time when delicate policies are needed to see how far interest rates can be lowered without stimulating real estate buying sentiment." He added, "We must alleviate the difficulties of small business owners and ordinary citizens so that the gradually recovering consumer sentiment does not falter again."