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As a candidate and now as president, Donald Trump has yielded an alarm in the South Korean government and its business community, Just as is the case with Japan. This is because his policy could seriously influence Korean companies that had been invested or are planning to deposit additional funds in the United States, which export directly or indirectly (for example via Canada) to the US, participating in initiatives in initiatives South Korea-us, with narrow ties, with narrow ties to China, or engaged in difficult dealing with American companies in South Korea. The wealth and importance of bilateral economic ties and the wider South Korea-us Economic and Security Partnership justify a further consideration of these generally under-treated issues and ways for Korean companies to respond.
A threat that has received appropriate attention is the likely American retreat of the Inflation Reduction Act (IRA), which, among other things, encouraged the Korean electric vehicle (EV) and the investment of the electric battery in the US, as well as the chips and science ACT, which has supported the Korean semiconductor-related investments in the United States. As for the IRA, the issue is that the new American administration has paused Payment of funds assigned under the law via a executive order. Regarding the Chips ACT, the care is that Trump will terminate, freeze or collect loans and subsidies and subsidies.
Korean managers have made it clear that these programs are crucial factors of the South Korean Direct Foreign Investments (DBI) in the United States. The IRA and the Chips Act have stimulated $ 54 billion in EV and Battery DBI by large Korean players such as LG Energy Solution, SK ON and Samsung SDI. They have also stimulated dozens of billions of BDI in semiconductor-related facilities by Korean companies such as Samsung Electronics and SK Hynix.
Stimulating the aforementioned fears is Trump and team members such as Energy Secretary nominated Chris Wright’s aversion to EVs and subsidies, economic nationalism, Preference for fossil fuels, nuclear energy and gas -driven vehicles drivenAnd love for rates such as a ‘stimulans’ of the BDI.
Trump’s plans to en masse to stimulate the rates about China and considerably for American allies and partners such as South Korea, Canada and Mexico are very threatening for Korean companies in South Korea and foreign locations, including the United States. After all, they have invested remarkable amounts in such countries to lower their production costs, to tap supply chain clusters and jump walls.
Moreover, Trump and his administration can re -view the most important bilateral economic agreement of the two countries; That is, the Korea-US Free Trade Agreement (Korus), which covers trade, BDI and other economic issues. Indeed, Trump previously criticized Korus and threatened his cancellation. Note that the Mentor of Trump’s American Trade Representative (UST) appointed Jamieson Greer, former Ustr Robert Lighthizer, who played a key role in 2018 when re -negotiating Korus, has disapproving the results of the agreement several times.
South Korea and the US work together in many economic security areas under bilateral and multilateral auspices. Collaborative companies include government, industrial and academic representatives and focus on areas such as high-tech, critical minerals and energy security. Examples in the first area Take the Korea-US advanced industrial and technology processing forum, the US-Korea Supply Chain and Commercial Dialogue and the US-Korea Semiconductor Forum. In the second area, South Korea and the US have an early warning system for disturbances of the supply chain and work together on critical minerals. They also work together through the Multi-country Minerals Security Partnership (MSP), which promotes private and public investments in critical mineral supply chains. Regarding the third area, Korea and the US, have a dialogue for energy security and regularly discuss cooperation and prioritizing areas such as clean energy supply chains, lithium-ion battery recycling and nuclear energy. Billions in the US Department of Energy Units have also been awarded to South Korean companies or joint Korean companies or battery power stations.
It is likely that South Korea and the United States will continue to work together in these areas. However, since Trump is not a fan of multilateralism or institutionalized regulations, against subsidies and is on American production, it is likely that the aforementioned partnerships will or will be eliminated or eliminated or eliminated or eliminated.
Although his economic policy compared to China seems to be less certain than it once was, it was sentiment that Trump and most of his coterie -Vice -President JD Vance, State Secretary Marco Rubio, national security adviser Mike Waltz, Ustr -nominated Greer, and so on – and so forth – His China Hawks widespread. This means that they will probably put pressure on Korean companies, especially those in the field of high -tech, to limit or terminate the interaction with China. This is a serious matter given the breadth and depth of the China-Zuid-Korea investments, trade and other economic ties. Having said this, the unaccepting of the US compared to China also has advantages for Korean companies. For example, American efforts to Limit dealing with Chinese companies such as Catl and Tencent Open roads for South Korean companies to catch market share, to invest and show their high-tech and production options.
Another care for Korean companies that compete against or adverse dealing with American high-tech companies are the likely opposition of the Trump administration against the South Korean regulation of American high-tech companies such as platform and social media companies. Greer previously closed Korean online platform instructionsSpotting them as a “threat to the trade relationship between the two countries.”
South Korean companies have adopted a mix of political and business tactics to adapt to the threatening environment described above. On political front, they tried to take care of the favor by making gestures, such as donating to the inaugural Fund of Trump. They have also made decisions about management and personnel decisions that can improve connections with the new US government. For example, Hyundai Motors promoted an American to CEO rang. In the field of business front, they reconsider their investment plans in the US, Canada, Mexico and elsewhere. Korean companies also increase investments at home to improve their competitiveness.
These are sensible movements, but they are not enough. Korean companies must use their presence in American red states, which probably have the ear of Trump or his circle. They must also find ways to make contact with the appointed ambassador of Rubio and the United Nations Elise Stefanik, who both have made positive views about the relationship between the South Korea and the US. Having said this, there should be no excessive stress on the role of South Korea as an American security partner, since Trump thinks Seoul is not paying his fair share.
Korean companies and their government representatives must find ways to increase investments in areas such as critical minerals that give the US priority to increase cooperation in the field of great interest in Trump and his team, such as infrastructure, nuclear energy and shipbank, and to to increase the separation from the separation of China. It is also necessary for Korea companies to expand economic interactions with other countries and companies, to reconsider the geographical distribution of their BDI and to become more efficient and innovative.
The South Korea-us Economic Partnership is now at a crossroads Trump occupies the White House. The path ahead for Korean companies will be difficult to navigate given all the challenges, uncertainties about what Trump will do and domestic political instability in South Korea. Anyway, Korean companies cannot afford to stand still. It is essential that they embrace a proactive instead of a reactionary approach to prevent weakening, discharging and devitalization that can result from Trump 2.0.