"US, Regardless of Who Wins... Acceleration of Restructuring in Korean Automobile Industry System"

On the 5th, as the vote counting for the 46th U.S. presidential election was underway, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On the same day, the KOSPI index opened at 2,373.41, up 16.09 points (0.68%) from the previous trading day, maintaining a strong trend. The won-dollar exchange rate opened at 1,130.0 won, down 7.7 won, showing a declining trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Kiho Sung] As the 46th U.S. presidential election unfolds in an unpredictable manner, domestic industries are closely monitoring the outcome. In particular, the automotive industry, which is expected to be most affected by this election, appears to be struggling to prepare countermeasures as production system restructuring is likely to accelerate regardless of who wins.

Domestic economic organizations and research institutes predict that whether President Trump or Democratic candidate Biden wins, the overarching theme of 'America First' will be maintained, and a tough stance toward China will continue.

According to the Korea Institute for Industrial Economics and Trade, the industrial policies of each candidate share a similar overall tone but differ in detailed policies. Both are expected to promote industrial policies that interlink corporations, trade, technology, and security to reorganize the global value chain centered on the U.S. and pursue decoupling from China.

The automotive industry will also maintain the broad framework of 'transition to eco-friendly vehicles,' but the pace is expected to differ. Chul Cho, Senior Research Fellow at the Korea Institute for Industrial Economics and Trade, explained, "The U.S. federal government's policy direction for the automotive industry is a major shift toward eco-friendly vehicles. However, if Biden wins, this trend will accelerate, whereas if President Trump is re-elected, the pace may slow somewhat."

Candidate Biden emphasizes policies on 'climate change and eco-friendly, clean energy.' During his campaign, he pledged to rejoin the Paris Climate Agreement on his first day in office if elected president. Accordingly, if the U.S. administration changes as a result of this election, a major transformation in energy-related businesses is expected, and the automotive industry is anticipated to rapidly reorganize toward eco-friendly vehicles.

On the other hand, if President Trump is re-elected, the internal combustion engine system is expected to be maintained a bit longer to protect existing industries. The Korea Institute for Industrial Economics and Trade anticipates that industrial revitalization will be pursued through tax cuts and deregulation, government investment in infrastructure industries and core advanced technology development, and a domestic-first policy in public projects and procurement.

The problem is that restructuring of the automotive production system is inevitable regardless of which candidate wins. Biden’s policy for transitioning to an eco-friendly era is expected to naturally reduce jobs. According to data from the Japan Auto Parts Industries Association, internal combustion engine vehicles contain about 30,000 parts, while electric vehicles and hydrogen vehicles require only about 19,000 and 24,000 parts respectively. Fewer parts inevitably mean fewer jobs.

President Trump emphasizes America First and is expected to promote reshoring to the U.S. The key issue is the 20% tariff imposition. Even a 5% increase in tariffs would significantly impact exports of domestically produced vehicles. To overcome this, expanding production at U.S. factories would put pressure on domestic production jobs. Ultimately, whichever candidate wins, the automotive industry will face the challenge of job reductions.

Professor Hogun Lee of Daeduk College’s Department of Automotive Engineering stated, "Regardless of who wins, downsizing at Korean factories is inevitable. Since conflicts with labor unions are expected during this process, how this issue is resolved will be crucial."

Short-term shocks after the U.S. election are also a concern. According to the Federation of Korean Industries, an analysis of export trends to the U.S. over the past 30 years shows that in the year following the presidential election (8 election years), exports to the U.S. decreased by an average of 4.2% compared to the previous year. In particular, the automotive sector showed an average growth rate of -6.9% in the year after the U.S. presidential election, indicating it is the most sensitive to the impact.

An industry insider pointed out, "Even if Biden wins, unexpected policies such as corporate tax increases to protect domestic industries may emerge. Due to high uncertainty, preparations for this are necessary."

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