Reviving American Manufacturing Through Tariffs... Opportunities and Shadows for South Korea [Deglobalization? New Order!] ⑧

What Lies Ahead for the U.S. Economy?

The United States is once again calling for a "manufacturing revival." The second Trump administration has used tariffs as a weapon to reshape the global trade order while shifting the focus of industrial policy toward manufacturing. The administration is also strengthening cooperation with key allies in sectors such as semiconductors, batteries, automobiles, shipbuilding, and nuclear power. The goal is to contain China and restore domestic jobs, but there are still questions about whether this strategy can truly succeed.

The Combination of Tariffs and Manufacturing Revival

The second Trump administration introduced a reciprocity model that imposes a basic tariff on all trading partners and adds extra tariffs to countries with large trade deficits. This is not merely a protectionist measure that makes imports more expensive, but is being used as a political and economic tool to revive manufacturing. Tariff revenues are funneled into fiscal resources, which are then used for tax cuts or cash rebates, ultimately fulfilling the political promise of "reviving American manufacturing."

Within the United States, there are high expectations that manufacturing can once again serve as a foundation for supporting the middle class. Until the mid-20th century, the U.S. was the undisputed leader in global manufacturing, but its share has steadily declined amid deindustrialization and global division of labor. The current tariff policy is an attempt to reverse this structural decline. However, economists point out that while the policy may bring back jobs in the short term, it will be difficult for the U.S.-with its high-wage, high-cost structure-to secure long-term manufacturing competitiveness.

Lee Siwook, President of the Korea Institute for International Economic Policy, analyzed, "Tariff policy is not just a matter of trade disputes; it is directly linked to the distribution structure within the United States. In particular, since lower-income groups have a higher proportion of imported goods in their consumption expenditures, tariffs act as a regressive tax." He added, "If tariffs are fully reflected in prices, inflation will directly translate into dissatisfaction among the middle and lower-income classes, which could become a political variable. Ultimately, the sustainability of the tariff regime will be determined by economic indicators, especially price indices."

President Lee also noted, "Currently, the U.S. tariff policy is based on the International Emergency Economic Powers Act (IEEPA), but the Supreme Court is reviewing its constitutionality, and depending on the outcome, institutional constraints may arise. If legal, political, and economic constraints overlap, a unilateral and aggressive tariff policy like the current one will be difficult to sustain in the long term."

Currently, the U.S. strategy is focused above all on containing China. In advanced industries such as semiconductors, batteries, solar power, and electric vehicles, Chinese products have been effectively blocked from the U.S. market. This has clearly slowed the pace of China's industrial advancement. Especially in semiconductor equipment and materials, export controls by the U.S. and its allies have imposed severe restrictions on Chinese companies.

However, these measures have not stopped the development of China's advanced industries altogether. Since the launch of "Made in China 2025," China has continued to make large-scale investments in semiconductors, electric vehicles, robotics, and artificial intelligence. Given its production networks and talent pool, most forecasts suggest that although growth may slow, China will eventually catch up. In fact, China is already the world's largest market and producer in solar power, batteries, drones, and electric vehicles.

This is why many believe that while the U.S. can play the role of a "restrainer" that slows China's rise, it cannot fundamentally block its pursuit. This situation mirrors the early 20th century, when the United States, as the largest market and producer, led global manufacturing in automobiles, electricity, and nuclear power-a role now being replayed by China.

Opportunities and Risks for South Korea: Cooperation and Challenges

The U.S. manufacturing revival strategy presents both challenges and opportunities for South Korea. Traditionally, South Korea has had a high dependence on exports, with significant trade with both the U.S. and China. If South Korea can fill the "gaps" created by U.S. efforts to contain China, it stands to benefit.

Examples include the partnership between Hyundai Motor Company and General Motors, semiconductor cooperation between Samsung Electronics and Tesla, the MASGA (Make American Shipbuilding Great Again) project, and nuclear power cooperation. Shipbuilding and nuclear power are areas where South Korea has a clear comparative advantage. The trend of the U.S. excluding China and instead choosing South Korea as a partner is likely to strengthen. In semiconductors and batteries as well, South Korean companies are recognized as reliable supply chain partners in the U.S. market, unlike their Chinese counterparts.

Yonhap News Agency

However, these opportunities for cooperation also come with risks. The recent detention of South Korean workers during a large-scale crackdown on undocumented immigrants in Georgia highlights the darker side of bilateral cooperation. Visa issuance for skilled workers has long been an issue, but this incident exposed the real risk that could threaten the sustainability of industrial cooperation. Ultimately, if Korea-U.S. cooperation expands without institutional support, "invisible variables" such as labor issues could become stumbling blocks.

Hyun Jeongsik, a professor at the University of Alberta in Canada, explained, "Canada has directly experienced the impact of U.S. tariff policy, with core industries such as automobiles and energy being hit hard. As a result, there is a growing trend not just to exchange retaliatory tariffs, but to shift the export structure itself toward Asia and Europe." He added, "The Canadian case has implications for South Korea. While it is essential to cooperate closely with the U.S., the lesson is that unless new markets are developed, South Korea could always be vulnerable to policy changes."