The recent US Presidential election on November 5th, which will lead to Trump’s second term, has raised concerns in South Korea across multiple sectors, including trade, energy, high-tech industries, financial markets, and diplomatic policies. In the week following the presidential election, various analysts predict that the new administration will have a significant impact on South Korea’s economy.
According to the Korea Chamber of Commerce, the most likely scenarios include the introduction of a “Tariff on All Imports,” a “Return to Fossil Fuel,” an increase in “Uncertainties in the High-Tech Industry,” “Monetary Policy Interference,” and “Personal Diplomacy” between North Korea and the United States. I believe South Korea must prepare in advance for these changes.
Tariffs on All Imports: Given South Korea’s trade surplus with the United States—$44.4 billion last year and $28.7 billion in just the first half of this year—there are strong possibilities for the renegotiation of existing agreements like the Korea-U.S. Free Trade Agreement (FTA). If Trump’s Mutual Trade Act passes, regardless of their alliance status, South Korea may face increased tariffs and rising trade barriers.
Return to Fossil Fuel: Energy prices are expected to fall as Trump expands US fossil fuel production. This could reduce South Korea's energy import costs and benefit energy-importing companies. However, uncertainty in the renewable energy sector, including solar and wind, may increase, posing a challenge to South Korea’s green energy initiatives.
Uncertainties in the High-Tech Industry: Currently, China represents around 50% of South Korea’s semiconductor exports. There may be U.S. demands for cooperation on semiconductor issues. South Korean companies with major production facilities and markets in China will need to strategize to mitigate potential impacts.
Monetary Policy Interference: Trump’s election has implications for the dollar exchange rate. While a strong dollar trend may continue in the short term, a weaker dollar is expected in the long run. Recently, the Korean won-dollar exchange rate surged from 1,307 won to over 1,400 won, indicating rapid currency fluctuations.
Personal Diplomacy: Experts predict that Trump’s North Korea policy could shift toward direct negotiations between U.S. and North Korea. This may increase geopolitical uncertainty on the Korean Peninsula. As North Korean troops have now joined the ongoing Russia-Ukraine conflict, South Korea will need to monitor Trump’s diplomatic moves and pursue diplomatic efforts to support North Korea’s denuclearization.
As South Korea prepares for these potential changes, proactive measures across these domains will be crucial in adapting to the evolving U.S. policies and minimizing their economic impact.
Furthermore, as an undergraduate student studying international trade and economics, I believe Trump’s re-election will have a significant impact on South Korea’s stock market, especially in sectors that are heavily dependent on U.S. markets. Major South Korean semiconductor companies, like Samsung Electronics and SK Hynix, will experience substantial fluctuations in their stock prices during the start of the Trump administration.