October 22, 2024
SEOUL – Whether Democratic presidential nominee Kamala Harris or Republican candidate Donald Trump takes the White House, US tariff policy for the next four years is the top concern for Korean firms, according to Korea Chamber of Commerce and Industry poll results on Monday.
In a survey conducted on 300 Korean manufacturing companies from Oct. 2-11, over a quarter of Korean companies, or 25.6 percent, said Trump’s plan of “expanding universal and reciprocal tariffs” grabbed their attention the most among his proposed economic policies. Some 18.5 percent showed interest in Trump’s trade strategy to reduce the US trade deficit.
The former US president, an advocate of protectionist trade policies, called for a “manufacturing renaissance” in the US during his first campaign visit to Savannah, Georgia, in September.
Trump has proposed to raise blanket tariffs on all imports from the current average of 3 percent to 20 percent tops, with tariffs as high as 60 percent on goods from China and 1,000 percent on Chinese vehicles produced in Mexico.
Regarding trade policy, Trump promised to strengthen bilateral negotiations based on the “America First” principle and reduce the trade deficit by establishing a domestic-centered supply chain through an “on-shoring policy” that would expand production facilities in the US.
Other Trump economic goals that Korean firms are paying keen attention to include the reduction of benefits for foreign companies investing in the US (13.9 percent), policies tied to the US-China decoupling (12.7 percent) and corporate tax reduction plans (8.2 percent).
In an opinion piece contributed to Newsweek on Oct. 1, Trump wrote that his second term will bring a score of foreign entities to US soil. His capricious remarks toward foreign companies operating in the US appeared to entangle Korean firms’ overseas expansion and investment plans.
“Vote Trump, and you will see a mass exodus of manufacturing from China to Pennsylvania, from South Korea to North Carolina, and from Germany to Georgia.”
On the flip side, the former US president seeks to cut US government subsidies to foreign companies that invested in the US market during the Joe Biden administration. Rolling back the Inflation Reduction Act and CHIPS and Science Act could affect Korean conglomerates like Samsung Electronics, Hyundai Motor and SK Hynix.
With a hardline stance on China in play, Trump plans to revoke China’s “most favored nation” status, a trade status the US granted China when it joined the World Trade Organization in 2001. He seeks to suspend imports of essential goods from China in phases, such as electronics, steel and pharmaceuticals.
Looking at the economic proposals of US Vice President Harris, what Korean companies cared about the most was her tariff plan and expansion of multilateral trade centered on allies.
While Harris raised the alarm about the inflation risk posed by Trump’s universal tariff suggestion, she has not identified any potential alterations to the Biden administration’s “strategic and targeted” tariffs on China’s steel and aluminum products.
On trade, a Harris administration is expected to develop a shared economic security agenda with allies and partners.
In the survey, Korean companies said they paid attention to Harris’ proposal on corporate tax increases and de-risking policy against China as well as her eco-friendly and decarbonization plans.
In August, Harris said she would push an increase of the corporate tax rate to 28 percent from the current 21 percent to boost revenue if she won the White House.
She suggested a de-risking strategy to maintain economic cooperation with China and reduce risk factors by lowering excessive economic dependence.
As Harris has long supported action on climate change, more robust eco-friendly policies are expected compared to the current Biden administration.