Security and economic impact from Trump 2.0

If a U.S.- china tariff war breaks out, Korea will suffer
critical damage.

Kim Hyun-wookThe author is president of the Sejong Institute. With the landslide victory of Donald Trump, 78, in the Nov. 5 election, the 45th U.S. president will take office as the 47th president on Jan. 20. The Republican Party also won control of both the Senate and the House in that election. The Supreme Court is also dominated by the old guard: 6 conservatives vs. 3 liberals. If the rest of judges to retire during Trump’s second term are replaced by conservatives, the incoming administration will take control of the judiciary, too. This uniformity is unprecedented in U.S. history.

The biggest reason for Trump’s overwhelming triumph is the economy. Joe Biden’s administration spent too much money on overcoming the Covid-19 crisis, which spiked high inflation. The Biden administration managed to control price hikes through high interest rates, but it couldn’t ease the economic hardship acutely felt by American voters. The second reason is Kamala Harris’s lack of qualifications as a presidential candidate. Her ascending approval rating after Biden’s sudden withdrawal from the race in July was stuck in the box from late September. Harris failed to present a clear policy vision. Third, a considerable number of voters like Black and Hispanic men — traditional supporters of the Democratic Party — turned to Trump after finding his merits over Harris on key issues like the economy, immigration, abortion and foreign policy.

Who will be recruited as core members of Trump’s diplomatic and security teams in the second term and what policy can we expect from them? The European Council on Foreign Relations (ECFR) classifies the Republican Party’s diplomatic and security experts into three groups: “primacists,” “prioritizers” and “restrainers.” While the first group insists on pursuing a global foreign policy for America, the second group wants U.S. foreign policy to focus on restraining China and the third group places top priority on protecting U.S. interests rather than intervening in global affairs.

The first group who champions U.S. leadership and military presence worldwide include former UN Ambassador Nikki Haley, former Secretary of State Mike Pompeo and former Vice President Mike Pence, while the second group who prioritizes checking China are represented by Vice President-elect J.D. Vance and former Deputy Assistant Secretary of Defense Elbridge Colby. The third group of “restrainers” include former White House Chief Strategist Steve Bannon and former Acting Director of National Intelligence Richard Grenell.

Among the three groups, the second and third groups are expected to be recruited as Trump’s diplomatic and security aides. Senator Marco Rubio, the candidate for secretary of state, and Rep. Mike Waltz, the candidate for national security advisor, both show strong antipathy toward China. In addition, Grenell, Colby, Lt. General (Ret.) Keith Kellogg, director of the Center for American Security at the America First Policy Institute (AFPI), and Frederick Fleitz, former chief of staff to former National Security Advisor John Bolton, are also expected to join the Cabinet.

What about Trump’s foreign policy in his second term? An ardent champion of America First, Trump won’t hire anyone who opposes his policy. Thanks to the Republican Party’s control of both the Senate and the House — as well as the judiciary branch — Trump will push his strong foreign policy much faster than in the first term.

What about Trump’s trade policy in his second term? First, he will use tariffs as a major weapon against U.S. trade partners. He already pledged to cut their trade surplus with America and protect the interests of U.S. companies and citizens by imposing a universal 10 to 20 percent tariff on all imports from foreign countries. In that case, Korea’s total exports are anticipated to shrink by about $44.8 billion, according to the Korea Institute for International Economic Policy. Korea’s GDP is also projected to dive by as much as 0.67 percent. Korean exporters will build factories in the United States to avoid tariffs.

Second, Trump will cut subsidies and tax benefits for foreign companies. He already vowed to eliminate all the rewards for foreign companies investing in the United States under the Inflation Reduction Act (IRA) and the CHIPS and Science Act. Revisions to the two laws have a slim chance of passing both the Senate and House, but Trump will certainly curtail the subsidies and tax credits through executive orders. It is fortunate that most of the plants being built by Korean companies are located in states run by Republican governors.

Third, energy policy will drastically change under Trump. He already pledged to expand the use of fossil fuels and nuclear reactors. That will hurt Korea’s renewable energy companies. However, as crude oil and gas prices will fall, it’ll provide opportunities for energy design, procurement and construction companies. Korea’s nuclear power industry also can expect benefits.

Fourth, Trump will most likely revisit the Korea-U.S. Free Trade Agreement. He already pledged to renegotiate the United States-Mexico-Canada Trade Agreement. The Korea-U.S. free trade deal will be no exception. Trump will pressure Korea to import more American agricultural and marine produce to improve the U.S. trade balance.

What’ll happen to Trump’s policy toward China? He will surely pursue “broad decoupling” from China by imposing ultra-high tariffs of 60 to 100 percent on all Chinese imports. It’s even more aggressive than the U.S.-China trade negotiations during his first term. If the tariffs trigger retaliatory tariffs from China and a U.S.-China tariff war breaks out, Korea will suffer damage. Trump 2.0’s security policy toward China is ambiguous to some extent. Though he threatened to impose a 200 percent tariff on all imports from China if Taiwan is attacked by China, Trump doesn’t like military intervention in overseas armed conflicts. That’s why advocates of an isolationist path are expected to gain ground during his second term.

What’ll happen to the Ukraine War? Trump has already drawn up a draft of a peace treaty on the protracted war. The problem is Ukraine’s response. As Ukraine opposes a peace treaty without territorial recovery, it won’t accept any security guarantee without Ukraine joining the NATO. What matters here is the North Korea-Russia relationship. Given Russia’s apparent intention to strengthen its relations with the North after the war, Putin’s enhanced ties with Kim Jong-un pose a serious security threat to South Korea. We must deliver to the Trump camp the message that Moscow must sever its ties with Pyongyang when an end to the war is declared.

What about Trump’s North Korea policy? He would meet with the North Korean leader again early in his second term to control the nuclear threat from North Korea. But we can foresee three sloppy negotiation scenarios: first, officially recognizing North Korea’s status as a nuclear power as Kim Jong-un wishes; second, maintaining the denuclearization policy yet easing sanctions during the phase of a nuclear freeze to accept the North as a de facto nuclear-weapon state; and third, omitting the required reporting, inspection and verification process during a nuclear freeze phase in a sharp departure from the past.

If this happens, it can trigger the demand for the South’s own nuclear armaments. Despite Trump’s aides’ occasional remarks about the possibility, the U.S. government wouldn’t support the idea. If South Korea pushes for its own nuclear development, it must secede from the Non-Proliferation Treaty and confront international sanctions. Another option is the redeployment of U.S. tactical nuclear weapons, as championed by some U.S. security experts to help solidify the nuclear umbrella in the Indo-Pacific region.

As a final option, the second Trump administration can push for the deployment of Tomahawk cruise missiles which can be launched from ships, submarines and ground launchers. The first Trump administration developed the B61 gravity bomb, Trident-II D5 SLBM and Tomahawk nuclear cruise missiles as non-strategic nuclear weapons systems. The Biden administration canceled the development of the Tomahawk missiles, but Congress restored it. We can imagine the deployment of nuclear submarines carrying Tomahawk missiles and Trident-II SLMBs sailing off the coast of the Korean Peninsula.

As Trump said he wouldn’t meet with state leaders before his inauguration, President Yoon Suk Yeol had better meet him at the earliest possible date after Jan. 20. A meeting of the two presidents armed with charismatic leadership can strengthen their bond. President Yoon also needs to prepare a deal strategy. In a phone call with Yoon, Trump requested the Korean government to cooperate in the ship maintenance, repair and overhaul (MRO). U.S. warships operating in the Indo-Pacific to keep China in check must return to the U.S. mainland for their regular maintenance and repairs, but it costs a lot of money and time.

America desperately needs MRO cooperation with Korea, which has excellent shipbuilding technology, for its successful operation in the Indo-Pacific. MRO can be used as an important leverage for Korea against Trump. Korea should use it as a means to contribute to the United States’ Indo-Pacific strategy and strengthen the decades-old alliance. Translation by the Korea JoongAng Daily staff.