seoul: Donald Trump's return to the White House is expected to have a significant impact on the export-driven South Korean economy and increase market volatility as he has warned of protectionist policies, decoupling from China and other drastic policy shifts across the board, experts said Thursday.According to Yonhap News Agency, Finance Minister Choi Sang-mok highlighted the potential repercussions during a meeting with relevant ministers to assess the outcome of the U.S. presidential election. "If the policy stance stressed by Trump is materialized, it is expected to affect our economy considerably. Given features of our economy with high external dependency, uncertainties in our industry environment would grow bigger," Choi stated.A primary concern for South Korea revolves around the potential implementation of sweeping tariffs by Trump. Last month, Trump described tariff as "the most beautiful word in the dictionary," and vowed to impose a minimum 10 percent, and up to 20 percent, tariff on all impor ted goods, with tariffs on Chinese imports potentially reaching as high as 60 percent.A report by the Korea Institute for International Economic Policy indicates that the "universal baseline tariff" of 10 percent could reduce South Korea's exports by US$44.8 billion annually. The real gross domestic product might also contract by up to 0.67 percent. Joo Won, a researcher at Hyundai Research Institute, warned that such extensive tariffs would reduce global trade volume and investment, significantly impacting the export-dependent South Korean economy.The finance ministry had forecasted a 2.2 percent economic expansion for South Korea next year, indicating a slowdown from this year's anticipated 2.6 percent growth. Higher tariffs could exacerbate inflationary pressures and weaken domestic demand in the U.S., further affecting South Korean exports.Concerns are also mounting about increased trade pressure from the U.S. on South Korea due to America's growing trade deficit with the Asian nation. In 2023, the U.S. experienced a $44.5 billion trade deficit with South Korea, a significant increase from the $13.2 billion deficit in 2018. This $44.5 billion figure represents the highest-ever surplus for South Korea in its bilateral trade with the U.S., with the first nine months of the year accounting for $39.9 billion, based on government data.Chang Sang-sik, an expert from the Korea International Trade Association, noted that during Trump's first term, the U.S. administration demanded a revision of the Korea-U.S. free trade agreement due to its trade deficit. While it may not be straightforward for Trump to revisit the pact solely through executive orders, there is a possibility of seeking other restrictive measures similar to the steel tariffs imposed under Section 232 tariff rules.Another concern is Washington's acceleration in decoupling from China and further shifts in supply chains. During his first presidency, Trump engaged in a trade war with China, imposing high tariffs on Chinese imports due to what he termed as China's unfair practices, such as currency manipulation and technology theft.Experts warn that if Trump adopts similarly aggressive policies against China again, it could provoke retaliatory measures from Beijing, leading to further trade and investment diversions between the two economies and increasing economic and geopolitical fragmentation globally. Song Young-gwan, an expert from the Korea Development Institute, pointed out that despite diversification efforts, South Korea's industry, including the semiconductor sector, remains dependent on China. A slowdown in the Chinese economy could worsen broader economic conditions for South Korea.Additionally, the expected unpredictability and policy discontinuity are likely to increase volatility in the foreign exchange market. The South Korean currency weakened sharply against the U.S. dollar, dropping to a two-year low on Wednesday.
- October 12, 2026
