"South Korea Must Reject Blank-Check U.S. Investments... Global Trade to Remain a 'Wild West' for at Least 10 Years" [Interview]

Jin Grossman, Professor of International Economics at Princeton University
Trump's Policies Have Shattered the Global Trade Order
"Utterly Unreasonable and Costly"... Policy Contradictions and Deepening Uncertainty
A Decade or More of Chaos Witho

"For at least the next 10 years, the global trade order will resemble the 'Wild West' era, where laws and norms disappear and only the strong prevail. South Korea must not comply with the United States' demands for a blank check approach to investment, and should instead strengthen cooperation with other countries that respect international norms."

Jin Grossman, a world-renowned scholar in international trade and political economy and a professor of international economics at Princeton University, recently stated in a video interview with Asia Economy that the trade policies of U.S. President Donald Trump have shaken the global trade order, offering this outlook. He said, "President Trump has dismantled a system that has been maintained for decades," and pointed out, "The world has witnessed that even if there is an agreement, a new leader can overturn it at any time if they do not want it."

Regarding President Trump's tariff policies, he directly criticized them as "completely unreasonable and unfortunate policies that only create high costs." He noted that while former President Ronald Reagan's administration had a clear goal of protecting manufacturing jobs, President Trump pursued multiple, conflicting objectives-such as increasing tax revenue through tariffs, reducing the trade deficit, creating jobs, and strengthening bargaining power-only increasing policy contradictions and uncertainty. He argued, "Policy uncertainty is the most toxic factor," and criticized, "Corporate investment is shrinking as a result."

His outlook was also pessimistic. Professor Grossman predicted, "As long as President Trump or his successor is in power, the United States will not return to free trade," and added, "Even if the Democratic Party takes power in 2028, it will take at least 10 years to restore the broken system."

Regarding South Korea, he warned that the 'blank check' investment-where Korea would spend funds without restrictions according to the timing, sector, and method desired by the U.S.-in relation to the $350 billion investment at the center of recent tariff negotiations, is dangerous. He emphasized, "South Korea must maintain a firm stance," and "Placing foreign investment under President Trump's control is risky for both countries." He further advised, "For at least the next five years, forget about the United States," and "South Korea should strengthen cooperation with countries that respect international norms, such as Europe, Japan, and Canada."

The following is a Q&A with Professor Grossman.

-How would you evaluate President Trump's second-term trade policy?

▲It is a completely unreasonable and unfortunate policy that only creates high costs. I do not believe the protectionist policies of the Reagan administration were right, but at least there was an understandable goal of protecting specific manufacturing jobs, such as those in steel and automobiles. In contrast, President Trump's policy simultaneously pursues conflicting objectives-such as increasing tax revenue through tariffs, reducing the trade deficit, creating jobs, and strengthening bargaining power-only increasing uncertainty. Corporate investment is inevitably shrinking.

-President Trump claims that the global trade system is unfair to the United States.

▲I completely disagree. The United States has been the greatest beneficiary of the global trade system it created. Not every worker benefited, but overall, every country enjoyed the benefits of trade. Except for a few sensitive industries that were exceptionally protected, trade barriers were generally low.

-How do you assess the claim that trade has reduced employment in the United States?

▲It is not that total employment has decreased, but rather that the employment structure has changed. The United States has a comparative advantage in high-tech, finance, services, and research-intensive sectors. While some manufacturing jobs have shifted overseas, manufacturing is not necessarily more important than other sectors.

-What impact will tariff policies have on the U.S. economy?

▲In the short term, they will lead to higher prices and reduced employment; in the long term, slower growth is inevitable. However, if prices stabilize and the economy remains robust, President Trump is likely to maintain his policies and even claim their legitimacy.

-The U.S. court has ruled against the reciprocal tariffs based on the International Emergency Economic Powers Act (IEEPA). What is your outlook for the Supreme Court ruling?

▲With a 6-3 conservative majority, the Supreme Court is likely to rule in President Trump's favor. The president has claimed that the economy is booming while simultaneously defining the trade deficit as an emergency to invoke IEEPA, which is logically inconsistent. However, since the Supreme Court is filled with Trump appointees, I do not expect them to curb his exercise of authority.

Professor Jin Grossman, an international economics professor at Princeton University, is conducting a video interview with Asia Economy on the trade policies of the Donald Trump administration. New York - Photo by Kwon Haeyoung

-How do you expect the global trade system to change going forward?

▲We are now in the Wild West era of international trade. Just a few years ago, protectionism was limited, and the rules and dispute resolution procedures of the World Trade Organization (WTO) functioned. However, since the Trump administration, agreements and rules have been ignored, and countries are acting unilaterally. The low trade barriers and stable division of roles that have been maintained for decades can no longer be expected.

-Is there a possibility that global trade will become increasingly bloc-based?

▲It is not ideal, but it is inevitable. Countries with similar values must cooperate. It would be desirable for the European Union, Canada, Japan, and South Korea to establish a new global trade order excluding the United States. The European Union can play a leading role.

-Is there a chance that the United States will become isolated and China will serve as an alternative?

▲It is unlikely that the United States will become completely isolated, as countries are clinging to bilateral negotiations out of fear of losing access to the U.S. market. However, China is unlikely to be a stable alternative. It failed to keep its promises when joining the WTO and has often circumvented regulations. Its political system also makes it unreliable.

-Is there a possibility that the United States will return to free trade and the global trade order will be restored?

▲It will be difficult for the next five years. As long as President Trump or his successor is in power, it is impossible. If the Democratic Party wins the 2028 election, some recovery may be possible, but I am not very optimistic. It takes a long time to rebuild a system once it has collapsed. However, it is positive that, according to polls, a majority of Americans still support globalization. They experience the benefits of free trade when they buy cheap Chinese products at Walmart and Target.

-How should South Korea, which is highly dependent on trade with the United States, respond? The U.S. is demanding a blank check investment of $350 billion.

▲South Korea must maintain a firm stance. Rhetorical concessions to appease President Trump may be possible, but (even if they do not work) South Korea should never actually meet his demands. Placing foreign investment under his control is risky for both countries. Above all, the United States is currently neither a friendly market nor a reliable partner. It would be preferable to strengthen cooperation with countries that respect international norms, such as Europe, Japan, and Canada. South Korea should also pursue membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

About Professor Jin Grossman

Professor Jin Grossman is recognized as a world-renowned economist in the fields of international trade and political economy. He is widely known for his extensive research on trade and growth, the relationship between economic growth and the environment, and the political factors shaping modern trade policy. He received his bachelor's degree from Yale University and his Ph.D. in economics from the Massachusetts Institute of Technology (MIT), and has been at Princeton University since 1980. He currently serves as the Jacob Viner Professor at both the Department of International Economics and the School of Public and International Affairs at Princeton University.