[2024 US Election] "Protectionism Will Deepen Regardless of Winner... Korea's Capacity Building Must Support Multilateralism and Globalization"

Generally, experts agree that the United States is intensifying its protectionist stance ahead of the presidential election, and regardless of who becomes president, protectionism will be further strengthened. Since the U.S. protectionism primarily targets China, South Korea may see short-term spillover benefits; however, there is also a significant possibility that Korean companies could suffer damage from such measures, highlighting the need for preparedness.

Professor Kang In-soo of the Department of Economics at Sookmyung Women's University said in a phone interview with Asia Economy on the 28th, "The intensification of U.S. protectionism should be accepted as a given," adding, "Both former President Donald Trump, the Republican presidential candidate, and Vice President Kamala Harris, the Democratic candidate, share the stance that production activities and job creation should take place within the U.S."

Professor Kang continued, "Former President Trump pledged not only a 60% tariff on Chinese imports but also universal base tariffs and reciprocal tariffs on all countries, including allies, which is a clear example," and explained, "Vice President Harris holds a similar position to the Biden administration, which has raised overall tariffs."

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The United States is strengthening protectionist measures ahead of the presidential election. The Biden administration has completed the long-delayed review of Section 301 tariffs on China and significantly increased tariffs in strategic industries such as steel, aluminum, automobiles, batteries, and solar power, including raising electric vehicle tariffs up to 100%. Additionally, import restrictions such as anti-dumping and countervailing duties have been further tightened. Former President Trump also aggressively promoted pledges such as a 10% universal tariff and a 60% tariff on China, signaling even stronger tariff measures than during his first term.

This intensification of protectionism is reflected in the numbers. From the second half of last year to the first half of this year, the number of new import restriction investigations surged, approaching record highs. According to the Korea International Trade Association, the number of new investigations sharply increased to 120 cases during the Trump administration in 2020, then decreased significantly under the Biden administration, but a total of 107 cases were initiated over the one-year period from the second half of last year to the first half of this year.

Han Areum, a senior researcher at the Korea International Trade Association, said, "Former President Trump cited the trade deficit as a reason for strengthening protectionism, but this was part of his pledge to win votes from manufacturing labor unions ahead of the election," adding, "President Biden also expressed strong domestic industry protection intentions, such as promising a threefold increase in tariffs on Chinese steel and aluminum during a speech to the steelworkers' union in Pittsburgh, Pennsylvania, in April this year, and Vice President Harris is likely to continue such measures."

Trade experts expressed concerns that while the intensification of U.S. protectionism may bring short-term spillover benefits to South Korea, the overall impact will likely be more negative. One researcher explained, "Most U.S. protectionist measures target China, and regulations on China's third-country transshipment exports are expanding, so there are some items that could see short-term spillover benefits due to substitution for Chinese products," adding, "According to the U.S. Trade Representative (USTR) report, after the imposition of Section 301 tariffs on China in 2018, the U.S. diversified its import sources, with third countries like Mexico replacing China, and notably, imports from South Korea increased in advanced industries such as semiconductors and batteries."

Professor Heo Yoon of the Graduate School of International Studies at Sogang University said, "The U.S. is containing China and the Western world is actively pursuing a strategy to isolate China, not only due to security risks but also to maintain a technological gap with China," adding, "There is an opportunity for South Korea as Korean companies can solidly maintain and partially replace much of the global demand that China has handled so far."

However, Professor Heo emphasized, "South Korea fundamentally gains profits by exporting and investing globally, so the strengthening of protectionism is not advantageous for Korea," and stressed, "To maximize Korea's capabilities, multilateralism and globalization must be supported." Professor Kang also pointed out, "Regardless of whether Harris or Trump becomes president, the stance to invest in building production facilities within the U.S. rather than exporting to the U.S. will be strengthened," adding, "Korean semiconductor companies investing in the U.S. must report technical elements to the U.S. Department of Commerce, which could ultimately weaken Korea's competitiveness."

Trade experts believe that restoring the functionality of the World Trade Organization (WTO) is necessary to respond to the intensification of protectionism, but they see it as difficult. Professor Kang said, "The U.S. believes the WTO has failed to punish China for intellectual property rights violations, forced technology transfers, and various subsidies," adding, "Since the U.S. has taken steps to paralyze the dispute settlement body, it is difficult for South Korea to normalize it."

In practical terms, experts argue that cooperation with major trading partners through frameworks such as the Trade and Investment Promotion Framework (TIPF) should be strengthened. Professor Heo suggested, "With free trade generally in decline, it is quite difficult to pursue legally binding free trade agreements (FTAs) with major countries as in the past," and recommended, "Creating various cooperative bodies based on flexible cooperation such as TIPF or the Indo-Pacific Economic Framework (IPEF) and strategic cooperation forms will be the most effective approach in the current situation."

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