I am now the chief editorial writer of The Korea Times. I also worked as the managing editor of the newspaper for 26 months from April 2018. Before that my stints included Politics Desk editor, Business Desk editor, City Desk editor and Culture Desk editor. As a journalist of The Korea Times, the most influential English newspaper of Korea, I have been committed to promoting 'international justice' beyond the social justice pursued by vernacular papers. My career includes working as a visiting scholar in Britain's Cambridge University from 2006-07.
Tariff mirage and Korea-US summit
A person shops for groceries at a store in Los Angeles, Calif., Aug. 12. The consumer price index increased a seasonally adjusted 0.2 percent for July and 2.7 percent on a 12-month basis, the Bureau of Labor Statistics reported Tuesday, amid fears of U.S. President Donald Trump's tariffs intensifying price pressures across a wide range of consumer goods. Yonhap
By Shim Jae-yun
History warns us. When Rome, the British Empire and Qing China faced decline, they all turned inward. Protectionism, rising tariffs and the breakdown of alliances marked the beginning of their long retreats from global leadership.
Shim Jae-yun
Today, the United States under President Donald Trump may be approaching a similar inflection point with the U.S. Trade Representative proclaiming the end of the World Trade Organization (WTO) regime and the advent of the “Trump Round” as a new phase in global trade.
Trump recently hailed a dramatic reduction in the U.S. trade deficit — down to $60.2 billion — as a triumph of his tariff policy. But a closer look reveals this to be an illusion, not a success.
A statistical mirage
The drop in the trade deficit is largely the result of inventory effects. Following Trump’s tariff threats, companies rushed to import goods in advance, stockpiling massive inventories. That front-loaded import surge in late 2024 inflated trade deficits to record highs, peaking at $140.5 billion in March 2025.
Since then, U.S. imports have plummeted, not because of economic strength, but because companies are still sitting on those stockpiles. Meanwhile, exports have also declined. The result is a so-called “recession surplus” — not driven by growing exports, but by shrinking imports amid weakening domestic demand. In other words, the numbers improved, but the economy did not.
Worse, this misreading of the data led to misguided decisions. In the first quarter in 2025, GDP contracted by 0.5 percent. In the second quarter, it bounced back to 3 percent — not due to real growth, but because of the temporary collapse in imports. The labor market data, initially appearing strong, was later revised sharply down by the Bureau of Labor Statistics. It turns out the U.S. economy wasn’t as healthy as the headlines suggested.
Yet both the Trump administration and the Federal Reserve mistook this optical illusion for real progress. The administration doubled down on tariffs, targeting allies like Korea, Japan and India. The Fed hesitated to cut interest rates, only to backtrack months later when the true weakness of the labor market became undeniable.
Tariffs as a symptom of decline
The deeper issue isn’t just one of data — it’s historical. Great powers don’t rise by building walls, but by building bridges. During the height of their power, Rome, Britain and the U.S. all championed free trade. High tariffs came only during periods of decline.
The United States once understood this. It used tariffs to protect “infant industries” during its agricultural-to-industrial transition in the 19th century. But today’s U.S. is no longer a low-income, labor-rich country. With a per capita GDP nearing $88,000, the idea of reviving low-wage manufacturing through tariffs is economically incoherent.
Trump’s policies seem focused not on nurturing emerging sectors like artificial intelligence or clean energy, but on reviving the old 20th-century smokestack economy. History provides no examples of successful protection of obsolete industries. This is not infant industry protection — it is nostalgia-driven regression.
Danger for the global economy
The risks go far beyond U.S. borders. Tariffs will inevitably raise consumer prices, especially as inventories run out. American companies rely heavily on imported raw materials like textiles, chips and batteries, and as new tariffs take hold, the prices of everything from electronics to essential goods will rise. This, in turn, will dampen consumption — the engine that drives 70 percent of U.S. GDP.
Monetary policy may try to soften the blow. The Treasury has already announced a form of “quantitative easing,” and the Fed may follow with rate cuts. But pumping more money into an inflation-prone environment is a dangerous gamble, one that could erode faith in the dollar and push investors toward gold and other hard assets.
Markets are already reacting. Gold prices are surging, signaling unease not only about inflation, but about policy uncertainty and economic mismanagement.
A moment for strategic recalibration
This is where allies matter. In a time of global disorder and shifting alliances, Korea remains one of America’s most reliable partners — economically, strategically and democratically. As the U.S. risks alienating other allies through unilateral trade actions, it must recognize the value of nations that continue to stand by its side.
The upcoming Korea-U.S. summit offers an opportunity to reset the narrative. It must go beyond symbolic gestures. What’s needed are tangible outcomes: cooperative economic frameworks, joint supply chain strategies and shared innovation goals.
If the U.S. wants to avoid the fate of past empires, it must choose collaboration over coercion, long-term vision over short-term illusion. The strength of a global leader lies not in how high it can raise tariffs, but in how firmly it can hold its alliances, and what results it can deliver through them.
The author is chief editorial writer of The Korea Times.