Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok presides over a meeting of economy-related ministers at the Government Complex Seoul, Thursday. Yonhap
U.S. President-elect Donald Trump's policies are expected to have “considerable impact” on the Korean economy in his second presidency, according to Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok, Thursday.
The top economic policymaker's comment came as Trump has been proposing more aggressive protectionist policies for the U.S. compared to his first presidency from 2017 to 2021.
These policies, such as higher tariffs, are likely to be achieved at the cost of the U.S.' economic partners, including Korea that has been losing growth momentum.
“The policy stance underlined by Trump is anticipated to have a considerable impact on the Korean economy if it is implemented,” Choi said as he presided over a meeting of economy-related ministers at the Government Complex Seoul.
The minister viewed that Trump's comeback to the White House might bring “drastic changes to Korea's external relations.”
“Under the circumstances, Korea will use its cooperation channels with the U.S. to maintain a rock-solid bilateral economic partnership,” he said, noting that Korea-U.S. ties are rooted in a robust alliance that has lasted for decades.
He said the economy-related ministers' meeting, which is held every week, will serve as “a government-wide control tower for preemptive and thorough responses” against heightened uncertainty.
In particular, the minister said separate consultative meetings will take place in three areas — financial and foreign exchange markets, global trade and industrial competitiveness.
Regarding the financial and foreign exchange markets, Choi said uncertainties are expected to run high for the time being and that the government will “pay extra attention and closely monitor the markets.”
“In case of excessive market volatility, we will take appropriate measures in accordance with our contingency plans,” he explained.
On trade, the government plans to minimize negative ripple effects on the Korean businesses over Trump's return, by taking suggestions from involved parties and developing response action plans.
A meeting involving the trade minister and other relevant officials will be launched within this month to counter risks faced by a range of industries.
“The government will capitalize on every possible means to enhance industrial competitiveness, to help businesses take a leap forward,” Choi said.
Multiple experts here and abroad speculate that Trump's policies, while being fiercer, will be in a more elaborate and sophisticated manner compared to those in his first term.
“It means Korea will deal with a tougher, trickier Trump administration beginning next year,” Hanyang University economics professor Ha Joon-kyung said.
He said Korea will be targeted increasingly by Trump, pointing out that the country moved up from the 14th in 2021 to eighth this year on the list of the countries that bring the biggest trade deficits to the U.S.
According to the Korea Institute for International Economic Policy, Korea's exports may fall by more than 60 trillion won ($42.96 billion) if Trump goes ahead with his plan of imposing a tariff of 10 percent to 20 percent on all imports.
Such a decline in exports can result in a 0.67 percent decrease in Korea's real GDP, the institute forecast. Goldman Sachs also predicted in a report that Trump's tariff policy can pull down Korea's economic growth rate by 1 percentage point.