Former U.S. President Donald Trump, who won in a sweeping victory in the presidential election in early November, will take office for his second term in January next year.
Republicans are expected to make a “red sweep” – holding control over the Senate and House of Representatives, on top of the executive branch, forecasting that President Trump’s policies will be executed aggresively.
Trump’s second-term government is expected to bring about tremendous changes, refining the global economic and security landscape, as well as world order, particularly in the trade and commerce sector.
What will be in store under his second term, particularly when it comes to national security and economic landscape of not only the United States but also other parts of the world?
Campaigning under the catchphrase “Make America Great Again” (MAGA), Trump made public pledges on the campaign trail, such as tariff increases and easing of regulations.
U.S. Republican presidential candidate Donald Trump gestures along with his wife Melania Trump after he was confirmed to be elected as the 47th president of the United States at the Palm Beach County Convention Center in Florida on Nov. 6.
If some of his campaign pledges are realized, they will have a great impact on not only the fiscal situation of the U.S. federal government, but also inflation, interest rates and economic growth of several parts of the world, Deloitte said in a report.
Trump’s second-term government is expected to maintain America-first policies and trade policy trends, such as trade protectionism moves, and the “Trump’s storm” is most likely to bring about a strong dollar, the report said.
If President-elect Trump’s public pledges like general tariffs and tax reduction are in place as he said, there will be a possibility that inflation might be refueled, and a decline in interest rates will be put off, it said.
President-elect Trump has already indicated a flurry of changes by nominating Fox News host Pete Hegseth as his choice for defense secretary, an unprecedented departure from more conventional star nominees.
Among the unprecedented nominees are co-founder and CEO of Tesla, Elon Musk, who has been tapped to head the Department of Government Efficiency in consideration of planting his “innovation DNA” in the U.S. administration.
Whether subsidies under the Biden administration's Inflation Reduction Act (IRA) and “CHIPS and Science Act of 2022” are abolished on top of economic indicators, such as interest and currency exchange rates, has become the subject of global attention.
U.S. Republican presidential candidate Donald Trump gestures after being shot in Butter, Pennsylvania, on July 13.
But it remains to be seen how the abolition of subsidies will be realized since electric vehicle-related companies are focused in areas with strong Republican support, or in battleground states.
Korea might be a target of trade protectionist moves under Trump’s second-term government, since the nation has achieved a trade surplus against the United States by a wide margin.
The automobile, semiconductor, steel, shipbuilding/shipping, energy, and pharmaceuticals/bio industries — the industrial sectors that lead the Korean economy and whose exports to the United States have a higher portion – are most likely to be affected by the new U.S. administration’s America-first, trade protection policies.
Korean companies in those industries have been watchful of external economic conditions and interest rate risks amid rising uncertainties, caused by the upcoming inauguration of the U.S. President Trump administration and will have to take steps to cope with the upcoming changes.
U.S. President-elect Donald Trump agreed on a peaceful power transfer with President Joe Biden during their meeting on Nov. 14, four months after their encounter in a TV debate.
The Korea Institute for Industrial Economics and Trade (KIET) said in a report that the semiconductor sector, Korea’s largest export item, will likely be under greater scope of control under the President Trump administration; not only semiconductor raw materials and equipment, but also ICT items will be placed under higher tariff pressure.
A core area of focus is changes in the import and export regime.
President-elect Trump has revealed his intent to impose higher tariffs against Chinese-made finished items, which might provoke retaliation against areas other than the semiconductor segment, as U.S.-China tensions will go up.
KIET said it is expected to have a short-term shock to Korea, which depends on its major chip sales in China.
In this case, Korean companies need to extend the deadline of their operation of chip plants in China and they have to do their utmost to explore new developing country markets, as opportunities to increase their market share in the smartphone and other demand markets segments.
The outlook of the Korean automobile industry is not rosy, the report said.
President-elect Trump cited automobile parts, produced by Korea and Japan, as the major cause of the U.S. trade deficit, and Trump said the Biden administration’s rash shift to EVs hurt the American economy.
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