We need to keep a close eye on the global second tariff war triggered by Trumpnomics 2.0.

The Korea Federation of Small and Medium Enterprises held a seminar on 'Industry-Specific Response Strategies Following the Launch of Trump’s Second Term' at its headquarters in Yeouido, Seoul, on the 15th.

This seminar was organized to seek response strategies for domestic small and medium enterprises amid ongoing uncertainties in the global economy in 2025 and expectations that protectionist policies will strengthen following the launch of Donald Trump's second administration on the 20th. About 70 representatives from small and medium enterprise cooperatives and import-export SMEs attended.

The president-elect emphasized 'America First' during last year's election campaign and pledged to impose a universal tariff of up to 60% on Chinese products and 10% on goods from other countries, including South Korea. This has raised concerns that the price competitiveness of South Korean SMEs will decline and exports will decrease.

Juwon, the head of the Economic Research Division at the Hyundai Research Institute, emphasizes on the 15th at the Korea Federation of Small and Medium Enterprises seminar titled 'Response Measures by Industry Following the Launch of Trump’s Second Term' that we must closely monitor the global second tariff war stemming from Trumpnomics 2.0. /Courtesy of Park Yong-sun.
/Courtesy of the U.S. Department of Commerce, provided by the Hyundai Research Institute.

In a presentation on 'Changes in the Foreign Economic Environment and Prospects for the Korean Economy in 2025,' Joo Won, head of the Economic Research Department at the Hyundai Research Institute, identified the prolonged trade slump due to the U.S.-China economic war and the potential for economic slowdowns in the U.S. and China as the biggest risks in 2025.

Joo emphasized, 'We need to keep a close eye on the global second tariff war triggered by Trumpnomics 2.0.' He noted, 'The goal of Trump’s trade policy is to improve the U.S. trade deficit,' adding that if the proposed tariff increases (60% on China and 10% on the world) are realized, South Korea's exports are expected to decrease by $14.3 billion to $19.1 billion (approximately 20.8 trillion to 27.8 trillion won).

He added, 'As a result, there will be downward pressure on South Korea's economic growth rate of 0.4 to 0.62 percentage points,' and advised that foreign corporations should establish rational export and investment plans, while domestic corporations should prepare for the possibility of market penetration by competing companies.

/Courtesy of the Hyundai Research Institute.

Joo also expressed concerns about the prolonged consumer slump in the Korean economy. He stated, 'Realistically, without policy assistance, the domestic slump is ongoing, and with a potential slowdown in export markets, the worst-case scenario of an 'L'-shaped long-term recession is highly likely.' Recently, global investment banks, including JPMorgan and Goldman Sachs, projected 1% growth for the South Korean economy in 2025.

Oh Seon-joo, a senior researcher at Samil PwC, says, “A national strategy is needed to be able to ride the wave of the new global economic order reorganizing due to increased protectionism and geopolitical risks after the launch of Trump's second term.” /Courtesy of Park Yong-sun.
The impact of Trump 2.0 industrial policy on the Korean industry. /Courtesy of Samil PwC.

Oh Seon-joo, a senior researcher at Samil PwC, also expressed concerns about the tariff war following the launch of Trump’s second term. Oh noted, 'The intensification of the tariff war between major countries will inevitably impact South Korea’s export-driven economy due to reduced global trade volume.' He added that there is a high possibility that the U.S. will include Mexico, Vietnam, and South Korea in its list of countries subject to renegotiation of trade terms alongside stringent sanctions against China.

Oh also pointed out risks from rising production costs due to the exclusion of China from the supply chain and China's diversion of exports to third countries at low prices (deflationary exports). He noted, 'For small and medium enterprises, the high dependency on intermediate goods from China poses vulnerability to external risks, and they could face significant impacts, not to mention the threats to newly formed supply chains after leaving China.'

Oh also forecasted that, based on an analysis of the impacts of Trump's 2.0 on domestic industries, the machinery, steel, semiconductor, automobile, and secondary battery industries will be negatively affected. Conversely, he anticipated positive effects on AI, space defense, biotechnology, chemicals, and shipbuilding industries. He emphasized the urgent need for real-time monitoring and diversification of production bases to prevent the recurrence of supply chain risks, calling for a national strategy to ride the wave of the new global economic order.