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IFANS Focus
How Trump’s Return Will Affect the U.S. Trade Policy Direction and the Global Trade Environment
LEE Hyo-young
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2024-12-18
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1. Trump’s Return and Revival of Tariff Policy
2. Supply Chain Restructuring and Industrial Subsidy Adjustments Amid Intensifying U.S.-China Tech Rivalry
3. Outlook for the Global Trade Environment in the “Trump 2.0 Era” and South Korea’s Strategy
1. Trump’s Return and Revival of Tariff Policy
On November 6, Donald Trump was elected as the 47th president of the U.S., marking the beginning of the “Trump Era” once again. In various aspects, the second Trump administration is expected to take different steps from those of the Biden administration. First of all, the U.S. trade policy is likely to be changed to serve as a tool to pressure not only China but also all trading partners, including its allies, through the use of import tariffs. The U.S. trade authorities, which advocated “reciprocity” during the first Trump presidency, seek to create an international trade environment that is no longer unfavorable to the U.S. by significantly increasing tariffs on countries that do not open their markets as much as the U.S. does. Most importantly, raising import barriers through tariffs will encourage foreign companies that want to sell products in the U.S. to establish local production facilities, thereby creating jobs and revitalizing manufacturing in the U.S.
The tariff policy of the second Trump administration is expected to become even tougher. For example, it is threatening China with imposing an unprecedentedly high import tariffs of 60% and revoking the country’s ‘Most-Favored-Nation (MFN)’ treatment and ‘Permanent Normal Trade Relations (PNTR)’ status. Imposing such a high tariff would require extreme measures equivalent to severing trade relations with China. Whether these extreme measures will be carried out in reality remains to be seen, but they are anticipated to be used as leverage to get China to make concessions. Furthermore, there is a chance that bilateral talks between the two nations would resume since China also does not want a trade war that would seriously hurt its economy. Ultimately, the extent to which the second Trump administration’s China policy will be pursued may depend on what “end state” the U.S., under Trump’s leadership, seeks to achieve.
During his presidential election campaign, Trump pledged to impose a “universal” tariff of 10-20% on all trading partners. While the actual implementation of such tariffs remains uncertain, it is expected that the U.S. will use both tariffs and its sizable domestic market to obtain major concessions from its trading partners. Without actually enacting policies that would also hurt its economy, the U.S. may achieve results similar to those of imposing high tariffs once an environment of fear is created by uncertainty and unpredictability. In addition, it is important to note that since universal tariffs target all trading partners, the potential increase in overall export prices would not be particularly unfavorable to the competitiveness of Korean companies and the prices of export goods. The ultimate goal of Trump’s universal tariffs is to address the U.S. trade deficit. Therefore, it is imperative that South Korea formulate negotiation strategies that take the U.S.’s policy goals into account. By promoting local investment in the U.S., which has been accompanied by growing exports of parts and intermediate goods, South Korea has made efforts to align with the goals of U.S. policy. These efforts should be highlighted in future trade talks in order to achieve exemptions or preferential treatment from the incoming Trump Administration.
* Attached File
#Trump
#EconomicSecurity
#TariffPolicy
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IFANS FOCUS 2024-12E(이효영).pdf.pdf
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