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Tariffs and tensions: Trump's trade offensive puts Korean industry on edge

Published: 07 Apr. 2025, 00:01

Kim Dong-ho

The author is an editorial writer at the JoongAng Ilbo.

U.S. President Donald Trump is renewing pressure on global manufacturers to bring production and jobs back to the United States, and the consequences are already being felt in Korea. On March 25, Hyundai Motor Group Executive Chair Euisun Chung announced a $21 billion investment in the United States, including plans to build a steel plant and expand automobile production capacity. The project is expected to create as many as 10,000 jobs. Trump wasted no time in taking credit, declaring that his tariff policies had led to this outcome. “Factories and jobs are coming back to American soil,” he said.

The announcement came just days before Trump declared April 2 “Liberation Day” and launched a new round of retaliatory tariffs aimed at foreign imports. His aggressive protectionist posture has sent ripples across the global economy, rekindling the same tariff-centered strategy that defined his first term in office. At the heart of it is a vision of economic nationalism that seeks to rewire global trade relationships around U.S. interests.

U.S. President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington on April 2. [REUTERS/YONHAP]

While Trump was touting investment inflows into the United States, Samsung Electronics Executive Chairman Lee Jae-yong was in China. He visited the headquarters of BYD, the electric vehicle manufacturer that recently overtook Tesla in global sales, and later joined other multinational CEOs for a meeting with Chinese President Xi Jinping. Xi pledged equal legal protection for foreign companies manufacturing in China, signaling that Beijing, too, is working to attract global capital and secure its position in the shifting trade landscape.

These parallel events underscore the strategic dilemma facing Korea’s leading firms. As Washington and Beijing pressure companies to invest within their respective borders, Korean corporations are being forced to navigate a rapidly polarizing economic environment. Remaining neutral is increasingly untenable, especially as both powers escalate efforts to dominate key industries like semiconductors, batteries and advanced manufacturing.

The tension is not limited to public declarations. When the United States announced a 34 percent tariff on Chinese goods, Beijing responded almost immediately with a matching 34 percent duty. The symmetry illustrates how deeply entrenched the trade conflict has become. Neither side appears willing to de-escalate, and both are shaping long-term strategies for industrial self-reliance and geopolitical leverage.

Trump’s second-term economic agenda is expected to take these policies even further. Much of this strategy is laid out in a 41-page report released last November by Stephen Miran, a senior official at the White House Council of Economic Advisers. Titled “A User's Guide to Restructuring the Global Trade System,” the report advocates for a fundamental restructuring of global trade around U.S. interests. It argues that the decades-long emphasis on globalization, financial services and free trade has weakened the U.S. industrial base and undermined its long-term competitiveness.

The report also challenges established economic principles, including the Triffin dilemma — the theory that the United States, as issuer of the world’s reserve currency, must inevitably run trade deficits. Miran proposes using tariffs to both rebalance trade and address what he sees as an overvalued dollar. He also questions the fairness of U.S. defense guarantees to allies, suggesting that they have been receiving the benefits of security without shouldering their share of economic risk.

Central to this vision is an aggressive onshoring policy. The goal is to bring the production of strategic goods — semiconductors, electric vehicles, batteries and pharmaceuticals — back to U.S. soil. The urgency is especially high in sectors like semiconductors, which are not only foundational to modern electronics but also crucial for military applications. U.S. policymakers have grown increasingly concerned about the country’s dependence on East Asian suppliers, including Korea, Taiwan and China. That concern is shaping both trade and foreign policy in increasingly assertive ways.

Hyundai Motor Group Executive Chair Euisun Chung delivers remarks as President Donald Trump, second from right, House Speaker Mike Johnson, R-La., left, and Louisiana Gov. Jeff Landry stand in the Roosevelt Room at the White House in Washington, March 24. [AP/YONHAP]

In some respects, this realignment has been underway for years. In 2018, the American Enterprise Institute argued that the United States needed to redesign global trade architecture to contain the rising influence of China and Russia. In 2021, the National Security Council released a report warning that China had already surpassed the United States in key areas of artificial intelligence. The Trump administration is now attempting to translate those concerns into policy, using tariffs and investment incentives to rebuild domestic industry.

The result is a sobering new reality for Korean firms. Hyundai’s massive investment in the United States suggests not just a market opportunity but a strategic necessity. “We are taking root in America,” Chung said, referring to Hyundai’s nearly 40-year presence in the U.S. market. With almost 30 million vehicles sold there since the 1980s, Hyundai may have had little choice but to deepen its local footprint.

Yet the deeper question remains: If Korea offered a more stable and business-friendly environment, would its leading firms be as quick to expand overseas? Persistent labor unrest, driven in part by confrontational tactics from the Korean Confederation of Trade Unions, along with what many business leaders see as anti-corporate regulatory policies from the opposition, have made domestic investment less attractive.

There is no clear end in sight to the global tariff war. Many economists and policymakers, even in the United States, warn that Trump’s strategy could backfire. Progressive groups have already mounted protests against his policies. Still, the immediate consequences are unmistakable: Factories built abroad become job sites for other countries. Korean investments in the United States will create U.S. jobs, not Korean ones.

If Korea is to avoid long-term industrial hollowing, it must address the growing disincentives to invest at home. That may require a pause in partisan infighting and a renewed national focus on keeping manufacturing — and jobs — within its borders. Without decisive action, the roots of Korean industry may continue to stretch farther from home.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.