About a year has passed since President Donald Trump reentered the White House. Since taking office on Jan. 20, 2025, Trump's second-term administration has completely upended the previous course of U.S. domestic and foreign policy. ChosunBiz has closely analyzed the future envisioned by Trump's second-term administration by sequentially covering everything from the U.S.-China trade war that erupted as the administration took office to U.S. domestic economic policy and interviews with experts on the ground in the United States and China. [Editor's note]
Since U.S. President Donald Trump returned to the White House, the world has spent a year readjusting to an era of tariffs. The United States and China have reduced many tariffs that had reached as high as 145%, but non-tariff barriers have instead risen around strategic industries such as semiconductors and rare earths. In this process, Korea, as a core U.S. ally and a country with deep economic ties to China, now faces the most complex set of choices.
Trump's second-term external strategy is far from a "restoration of alliances" or "return to order." The United States has used security and market access as bargaining chips, and allies were no exception. As U.S.-China tensions enter a prolonged phase, analysis suggests that what is required of Korea is not clear-cut alignment but strategic positioning by industry and issue.
◇"Allies are no exception"... the United States' shifting pressure on Korea
If U.S. pressure during Trump's first term focused on tariffs and reducing the trade deficit, the second term has made that pressure more sophisticated. Defense cost-sharing, semiconductor and battery investment, shipbuilding and defense cooperation, and even energy imports are presented as a single package. It is a signal that even allies will not be exempt unless they contribute to U.S. industrial rebuilding and supply chain strategy.
The Council on Foreign Relations, focusing on the National Security Strategy (NSS) the Trump administration released this month, said U.S. foreign policy is shifting from a values-based alliance approach to an emphasis on strategic, interest-based cooperation. The official document shows a tendency for the United States to demand more explicit burden-sharing and economic contributions even from allies, it assessed.
This stance is being applied to Korea as is. In semiconductors and batteries, Korea is being asked to expand investment in the United States; in shipbuilding and defense, it is being asked to make tangible contributions to rebuilding U.S. industry. At the same time, pressure continues to reduce technological and supply chain links with China.
◇This year is an inflection point in U.S.-China tensions… Korea's burden grows
Experts see this year as another inflection point in U.S.-China tensions. After the U.S.-China summit, certain measures were temporarily suspended or extended, but they are scheduled to end this year, raising the possibility of tensions resurfacing. On top of that, as President Trump enters the midterm election phase, there is talk that protectionism could strengthen again.
The World Trade Organization (WTO), in a report published this year, noted that "monitoring major countries' trade measures shows that non-tariff barriers and industrial support policies could have complex effects on global trade." WTO Director-General Ngozi Okonjo-Iweala also voiced concern that "if tensions are prolonged, the risk of trade fragmentation could grow."
Korea is positioned to face pressure from both sides in this environment. The United States is emphasizing the security alliance and demanding participation in U.S.-led supply chain restructuring, while China still has room to exert influence by leveraging technology, raw materials, and its domestic market. In particular, semiconductor equipment, AI, battery materials, and shipbuilding and shipping are areas where U.S. and Chinese interests collide head-on.
◇Korea's three options… what is the realistic solution?
Under Trump's second term, Korea's options broadly fall into three scenarios. First is to tilt clearly toward the United States. This is advantageous for security and financial market stability, but comes with risks such as possible Chinese retaliation and damage to the export structure. Second is to maintain balanced diplomacy between the United States and China. While this can spread risk in the short term, it is considered the most unstable choice in a Trump-style diplomatic environment that prioritizes deals.
The third is a differentiated strategy by industry. It would strengthen cooperation with the United States in security and core technology, while maintaining links in consumer goods, intermediate goods, and third-country supply chains with China and with third countries relatively free of U.S.-China tensions, such as India, Southeast Asia, and the Middle East. On this, the foreign affairs outlet The Diplomat analyzed that "what is required of allies is not a blanket choice but a sophisticated strategy that manages risks by sector."
The Brookings Institution, in its early-year report "How will South Korea navigate US-China competition in 2025?", also pointed out that "as strategic competition between the United States and China deepens, it is difficult for allies to respond with a single strategy."
The Economist also said, "Countries situated between the United States and China have entered a phase where it is no longer feasible to solve all issues with a single strategy," adding, "especially among advanced allied countries, strategies that approach issues by industry and case, rather than comprehensive choices, are spreading."
◇Korean government and corporations need "multi-layering," not "all-in"
Amid this trend, the role of the Korean government is to treat U.S.-China tensions as an economic security issue rather than a diplomatic one. Analysts say it should prepare scenario tables that assume a rekindling of U.S.-China tensions by industry and design shields so that corporations are not exposed to abrupt policy changes.
Corporations also need to recognize the risks of an "all-in" strategy on either the United States or China and multi-layer their production, investment, and export structures. The New York Times (NYT) noted, "U.S.-China tensions may appear to have eased on the surface, but patterns of competition and confrontation are continuing in other forms," adding, "in this environment, global companies and allied countries are redesigning strategies on the premise of long-term supply chain fragmentation and risk."
Global consulting firm McKinsey & Company, in recent reports, likewise said, "U.S.-China competition is becoming a basic premise of corporate strategy rather than a short-term variable," and pointed out that "excessive dependence on a particular country can amplify policy and geopolitical risks beyond any expense-saving effects."