ED US-Korea economic ties and vote
One question I’m increasingly asked is whether Donald Trump can retake the White House.
Despite facing 91 criminal charges across four cases ranging from election interference to the mishandling of classified documents there is a very real chance that Donald Trump could win the U.S. presidency in 2024. He has a slight lead in national polls, but more critically is leading in five of the six swing states.
Polls this far from election day rarely reflect the final result but given Trump’s lead in the Republican primaries, there is no reason to believe he will not be the Republican nominee. If he were to win the general election, it would have considerable implications for Korea.
A second Trump presidency would be significantly more challenging than the first. Establishment officials would mostly be unwilling to serve or would be unwanted in a second Trump administration. There would be no Gary Cohen to pull an executive order off Trump’s desk should he again decide he wanted to withdraw from the Korea-U.S. Free Trade Agreement (KORUS FTA).
Campaigns are often full of rhetoric and plans that do not come to pass, but in the case of Trump, it’s safer to assume he means what he says rather than that he is simply playing to the crowd. That suggests what he and those close to him say should be taken as actual intentions, even if the final details may look different.
The early indications of where a second Trump administration might take policy would undermine much of the cooperation between the United States and Korea developed over the last three years and would make disputes over the Inflation Reduction Act (IRA) and where electric vehicles (EVs) are built look trivial by comparison.
Trump himself has said that he would enact a 10 percent tariff on all U.S. imports, as he put it, a “ring around the collar.” There is no indication that Trump would make an exception for FTAs.
In supporting his protectionist trade policy, Trump has cited actions taken against Korea to demonstrate the benefits of his protectionist policies. At the time of the first Republican presidential primary debate, which he skipped to give his own interview, he praised how his tariffs on Korean washing machines helped to save U.S. manufacturers. In remarks to U.S. automotive unions during their recent strike, he bragged that by renegotiating the KORUS FTA he saved the U.S. automotive industry. Neither is accurate, but both demonstrate Trump’s continuing affinity for protectionist policies.
Beyond Trump himself, former Trump administration officials who are developing plans for a second administration have indicated that they would push to repeal the IRA. The IRA has little support among Republicans and a repeal of its EV and EV battery provisions was part of the House Republicans’ failed debt ceiling legislation earlier this year.
However, the best indication of a second Trump administration’s trade policy might be from former US Trade Representative Robert Lighthizer. He has indicated a willingness to serve in a second Trump administration and was perhaps the most influential voice in the first Trump administration on economic issues.
In both a New York Times op-ed and in testimony before Congress Lighthizer has called for what he has described as strategic decoupling from China. The objective would be to push China to provide the United States with reciprocity in trade. This would be achieved by increasing U.S. tariffs to a point that eliminates the United States’ trade deficit with China. Strategic decoupling would also seek to disentangle U.S. technology from China and limit U.S. investment in China.
To disentangle U.S. technology from China, Lighthizer has called for strengthening and expanding U.S. export controls on advanced technologies. He has also praised the CHIPS and Science Act as the type of legislation that the United States needs. This suggests that the CHIPS Act and U.S export controls on semiconductors would survive a second Trump administration, but likely see more stringent enforcement and the expansion of similar tools to new areas of technology.
However, there will be constraints on a new Trump administration’s agenda. While the polls are currently favoring a second Trump term, legal battles over Congressional districts suggest that the next Congress is highly likely to remain divided. It is unlikely that Democrats would vote to unwind the IRA and that any new legislation along the lines of the CHIPS Act would need to be genuinely bipartisan — something that may be challenging given what would likely be a highly partisan environment.
If a new Trump administration cannot legislate its objectives, it will likely turn to its administrative powers to issue new regulations or provide new interpretations to achieve its objectives. With more sympathetic political appointees and efforts to legalize the dismissal of significant portions of the bureaucracy on issues of loyalty, a second Trump administration would be more successful in advancing its agenda – even if it were not legal. The difficulty for Korea is that many of the high-tech areas of interest to a second Trump administration are also areas of Korea’s economic strength.
Troy Stangarone (ts@keia.org) is the senior director of congressional affairs and trade at the Korea Economic Institute.