The moves, analysts suggest, could have far-reaching implications for South Korea’s economy.
In a memorandum titled America First Trade Policy, Trump instructed the United States Trade Representative (USTR) to review all existing trade agreements and propose revisions deemed necessary to secure “reciprocal and mutually advantageous concessions” with FTA partners.
While the memorandum did not explicitly name South Korea, the Korea-U.S. Free Trade Agreement (KORUS FTA) is expected to come under scrutiny as part of the administration’s review of existing trade pacts.
The Commerce Department, in coordination with the Treasury Department and the USTR, was also tasked with examining the causes of America’s chronic trade deficits and assessing their economic and national security implications. The administration plans to recommend measures, including additional tariffs or other policies, to address these imbalances.
Korean automakers, battery makers face headwinds
In a separate executive order titled Liberating American Energy, Trump called for policies to foster the development of “affordable and reliable energy and natural resources.”
Among the most significant directives was the repeal of federal mandates promoting electric vehicles. Trump argued that regulatory barriers limiting consumer choice in the automobile market should be eliminated.
The order directed a review of subsidies and market regulations that the administration described as unfairly favoring electric vehicles over other technologies.
It specifically targeted measures that, in Trump’s view, effectively forced consumers, private companies, and government entities to purchase electric vehicles by making other options expensive.
The move is widely seen as a challenge to the electric vehicle tax credits introduced under the Biden administration’s Inflation Reduction Act. By rolling back such incentives, the Trump administration appears poised to dismantle key elements of the prior administration’s clean energy agenda.
For South Korea, a major player in electric vehicle and battery production, these policy shifts raise questions about the future of its exports to the United States and the stability of its broader economic relationship with Washington.
Meanwhile, the administration's energy strategy, encapsulated by its "Drill, Baby, Drill" initiative, aims to expand U.S. oil production, a move analysts believe could stabilize global oil prices by the latter half of 2025.
This, they say, might offer a reprieve for energy-importing nations like South Korea, which have been grappling with volatile crude markets.
"Although concerns remain about the export sector, we anticipate recovery in key industries such as automobiles, steel, and IT hardware," said Hwang San-hae, an analyst at LS Securities.
Dollar may lose steam
Still, South Korea faces challenges on the currency front. The won has weakened significantly in recent weeks, nearing 1,500 to the dollar, weighed down by domestic political turbulence and a robust global dollar.
Ryu Jin-yi, a researcher at SK Securities, predicts that the won-dollar exchange rate will likely decline after January but could rebound in the fourth quarter as the U.S. nears the end of its interest rate cut cycle.
Analysts also point to Trump's focus on reducing inflation as a potential catalyst for accelerated U.S. interest rate cuts. This, in turn, could alleviate the strong dollar phenomenon that has pressured South Korea’s monetary policy.
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