Lee Si-wook, head of the Korea Institute for International Economic Policy, argued that in response to the second term of the Trump administration, it is necessary to strengthen cooperation with countries such as Japan, Taiwan, and Germany, which are facing similar situations as South Korea. This is important in a context where prioritization is emphasized, as cooperation with countries that can share national interests is crucial.
On the afternoon of the 7th, Director Lee made these remarks during the keynote speech at the 2025 Joint Academic Conference held at the 56th Anniversary Memorial Hall of Hannam University in Daejeon. The keynote address focused on the theme of "Trump's second term trade policy: outlook and impact."
Director Lee projected that the Trump administration would impose tariffs to make up for the reduction in tax revenue due to tax cuts. He noted, "Last year, personal income tax accounted for 49% of the U.S. annual tax revenue," adding that there is a significant possibility that the government may politically leverage tariff policies to pursue tax cut policies.
Director Lee forecasted that the U.S. may apply high tariffs to countries that indirectly export Chinese goods. He stated, "While the increase in tariffs on China slows the growth of China's direct exports to the U.S., the indirect exports from China through third countries such as Mexico, Vietnam, and Taiwan have increased," emphasizing that there could be pressure in this regard in the future.
According to Director Lee, the countries that significantly contribute to China's overall indirect exports are Mexico, Vietnam, Canada, Taiwan, South Korea, and Japan. These countries account for 68% of all indirect exports from China. He argued that based on this, South Korea cannot be free from U.S. tariff policies.
Director Lee emphasized that while cooperation with "like-minded countries" was important during the Biden administration, strengthening public-private cooperation with "like-positioned countries" is now crucial. He remarked that cooperation with Japan, Taiwan, and Germany should be enhanced compared to the present, and there should be more efforts to cooperate with the Global South.
Director Lee also argued that the country should move beyond a trade policy focused on commodity exports. He stated, "As pressure on consumption and investment intensifies, the external sector continues to hold the key to economic growth, rather than domestic demand," suggesting that the focus should expand from commodity exports to service exports and the exchange of technology and information, as well as the movement of production factors.
He highlighted the widening gap between small and medium-sized enterprises and large corporations as a critical issue to address. Director Lee noted, "As the U.S. strengthens its onshoring policy, encouraging large corporations to increase overseas investment, the connection between domestically based small and medium-sized enterprises and large corporations will increasingly weaken," emphasizing the need to consider how to maintain and strengthen this connection in a healthy manner.