Preparing for Trump’s return

Troy Stangarone

Donald Trump is ready to return to the White Home later this month. Many world leaders are apprehensive about his return and uncertain the way to finest handle relations with the incoming Trump administration.

Whereas there are some distinctive facets to every nation’s issues, for South Korea, the uncertainty comes from financial insurance policies that can have a destructive affect on the Korean financial system, strain on South Korea to contribute extra to protection and whether or not any new method to North Korea does or doesn’t embody Seoul’s views on the way to handle relations with Pyongyang. These issues are solely heightened by Seoul’s personal home political uncertainty stemming from the impeachment of President Yoon Suk Yeol. That uncertainty, nevertheless, may be managed to an extent if South Korean companies and politicians have a greater understanding of Trump’s techniques and motivations.

Whereas Trump works to foster an look of unpredictability, he makes use of the uncertainty he creates by his seemingly contradictory statements and actions to supply leverage. Growing leverage is a key element of Trump’s method to coverage. Whether or not threatening to withdraw from the U.S.-Korea Free Commerce Settlement or threatening “hearth and fury” on North Korea, Trump is working to develop leverage on potential negotiating companions. Scott Bessent, Trump’s incoming treasury secretary, has instructed as a lot about Trump’s more moderen tariff proposals.

On this context, it’s necessary to bear in mind beliefs that Trump has held going again to the Eighties, that the US is being ripped off in each commerce and nationwide safety by its allies. In 1987, he mentioned: “Lots of people are bored with watching different international locations ripping off the US. … They snigger at us behind our backs. They snigger at us due to our personal stupidity.” That very same 12 months, in an advert in The Washington Submit, Trump castigated the US for shielding oil shipments from the Center East, saying, “The world is laughing at America’s politicians as we defend ships we don’t personal, carrying oil we don’t want, destined for allies who received’t assist.”

It has typically been mentioned of Trump that he must be taken critically, if not actually. Within the case of commerce and anticipating extra from allies, Trump must be taken critically given his lengthy historical past on these points even when the quantity of tariffs on any particular nation, for instance, shouldn’t be taken actually. However there may be additionally a component of non-public grievance that may be seen in his feedback.

However why does Trump view American commerce relations and relations with allies so negatively? Trump’s background in enterprise, particularly actual property, could present perception. In the actual property business, the purpose is to extract hire from a property. The upper-end the property, the extra hire that may be extracted. On this context, there isn’t a provide chain or comparative benefits from commerce that may profit a number of corporations or international locations, solely the property from which to extract hire. Therefore, you might be both successful or shedding fairly than the win-win dynamic that policymakers have pursued because the finish of World Struggle II within the West and globally because the finish of the Chilly Struggle.

For Trump, commerce agreements and alliances are properties from which the US has not been extracting the hire that it might for the world’s largest financial system or strongest navy. That the US has run commerce deficits with international locations like South Korea or that a lot of NATO has solely just lately begun to satisfy its personal spending necessities are simply proof for Trump. It’s this viewpoint that has led Trump to imagine that U.S. allies and companions have been “ripping” the US off.

What can South Korea do on this context? Within the quick time period, Korean corporations have to be extra aggressive in defending their pursuits with the Trump administration than they’ve been with prior U.S. administrations. Throughout Trump’s first time period, there was a course of put in place for corporations to get exemptions from the tariffs imposed on China. Pursuing future exemptions to tariffs will likely be key.

In areas of coverage, it is going to be necessary for Korean corporations to display to the Trump administration how investments below the Inflation Discount Act and the CHIPS Act will develop U.S. manufacturing jobs through the Trump administration and the way the plans they’ve for future investments will as properly. As corporations develop these funding plans, one thing Trump will count on, they might want to keep away from the errors of SoftBank CEO Masayoshi Son, who pledged to take a position $100 billion in the US solely to have Trump push him to double that quantity.

As soon as the present political disaster is settled, the South Korean authorities might want to play a bigger function. Decreasing the commerce deficit must be an preliminary step, however it might want to have interaction Trump in substantive ways in which tackle his issues whereas additionally factoring in South Korea’s personal nationwide pursuits. Merely attempting to carry the road on commerce or burden sharing is not going to be ample.

Troy Stangarone is the director of the Hyundai Motor-Korea Basis Heart for Korean Historical past and Public Coverage and the deputy director of the Indo-Pacific Program on the Woodrow Wilson Heart.