The impact of Trump’s America First policy on Korean Economy

The Donald Trump administration, which calls for “America First,” is continuing to raise its trade pressure on South Korea. The United States has pressured South Korea to come up with an agreement to revise the Korea-US Free Trade Agreement (KORUS FTA) and announced to launch a safeguard against washing machines made in Korea. These are measures to undermine the economic relations between the two countries.

South Korea and the United States agreed to revise the KORUS FTA on Wednesday (local time) and pursue domestic procedures to begin negotiations for revision. President Trump’s negotiation strategy, which he called a “disaster” during the presidential election, has finally brought South Korea, which did not want to reform or revise the FTA, to a negotiation table.

President Trump was quoted as saying that he was willing to be called “crazy” and showed a strong commitment to the KORUS FTA revision. AXIOS, an American news website, reported on Sunday (local time) that Trump had ordered U.S. Trade Representative Robert Lighthizer to “tell them (Koreans) that his person is too crazy and can take off now.”

There is more bad news to South Korean industry. At the end of last month, the United States ruled that the solar panels exported by South Korea would harm the U.S industry. As for steel products, there are also signs of restricting imports including imposition of anti-dumping duties. Furthermore, if the KORUS FTA revision focuses on the automobile market, Hyundai Motor Group and other automakers will take a huge hit in exporting to the U.S. In case of Hyundai, out of 657,531 units exported from January to August this year, 234,563 units, or 35.7 percent, were exported to the United States. If domestic automobile production is reduced due to a decline in exports to the United States, first, second and third suppliers will suffer greatly.

With the upcoming negotiations on FTA revision, there is a growing possibility that it will become a controversial issue between the ruling party and the opposition parties in Korea. Opposition leaders including Liberty Korea Party leader Hong Joon-pyo and People’s Party leader Ahn Cheol-soo continued to criticize the government. On the other hand, the ruling Democratic Party commented, “We’d like to ask (the relevant authorities) to put the national interest at the top priority in the revision negotiations.”