"US Presidential Election Following Year Sees Decline in Exports to the US... Support for Export Industries Essential"

[Asia Economy Reporter Ki-min Lee] Since South Korea's exports to the United States and U.S. direct investment related to Korea tend to contract in the year following the U.S. presidential election compared to the election year, there have been calls for government support for major export industries to the U.S.

The Federation of Korean Industries (FKI) announced on the 4th that, based on data from the Industrial Statistics Analysis System (iSTANS), an analysis of the trend in exports to the U.S. over the past 30 years from 1988 to 2018 showed that the average growth rate of exports to the U.S. in the year following the U.S. presidential election decreased by 4.2% compared to the previous year.

According to the FKI, South Korea's exports to the U.S. grew from $21.47 billion to $73.04 billion over the past 30 years, with an average annual growth rate of 4.2%. However, the average growth rate of exports in the year following the U.S. presidential election was -4.2% compared to the previous year.

This was analyzed to be because, out of eight occasions following U.S. presidential elections, five years recorded negative growth rates. In particular, in 2009, the aftermath of the financial crisis caused a sharp negative growth rate of -18.7%. Even excluding 2009, the average growth rate in the year following the election was -2.1%, still showing negative growth, the FKI explained.

When analyzing export performance by major industries (steel, automobiles, semiconductors, telecommunications equipment, general machinery), the industry with the largest fluctuation in export growth rate was steel. The steel industry recorded an average growth rate of -8.1% in the year following the U.S. presidential election, while in other years it grew by +20.7%, a difference of 28.8 percentage points. The FKI analyzed that the steel industry is sensitive to economic cycles and is the sector most affected by U.S. protectionist measures (anti-dumping, countervailing duties, safeguards, etc.), thus being relatively more impacted than other industries.

Next, the automobile industry also showed an average growth rate of -6.9% in the year following the U.S. presidential election, while in other years it grew by +13.8%, a difference of 20.7 percentage points. Semiconductors showed a gap of 12.2 percentage points with -0.7% and +11.5%, respectively.

U.S. direct investment in Korea also tended to decrease in the year following the U.S. presidential election. From 2000 to 2019, the average growth rate was 29.8%, but in four out of five cases following the U.S. presidential election, the growth rate was negative, with an average of -23.5%. The only year with positive growth was 2013, the year after the Korea-U.S. Free Trade Agreement (FTA) came into effect.

Yoo Hwan-ik, head of corporate policy at the FKI, pointed out, "There are numerous adverse factors for exports to the U.S., including the ongoing U.S. economic recession due to COVID-19, uncertainties from U.S.-China trade conflicts, strengthening protectionism, and the expansion of reshoring to the U.S."

He added, "Smooth trade negotiations with the new government and support for major export industries to the U.S., such as steel and automobiles, are essential. It is also necessary to secure labor market flexibility and expand tax benefits for research and development investment to encourage the expansion of U.S. direct investment."

This content was produced with the assistance of AI translation services.