Have you ever heard about the trade war? It is a kind of national policy that prioritizes own country’s corporation and makes a diversion another country’s corporation. We will pay more money for imported goods from America and China especially such as agriculture and stockbreeding. Also, we will decrease in exports like automobiles, semiconductors and computers.So we need to know seriousness about this war and devise a solution.
-Trade deficit and manufacturing dominance create conflict
The trade war began because the US buys more goods from China than China buys from them. That’s a trade deficit and that’s what started the trade war. America is no longer a manufacturing country and has lost external competitiveness in many areas due to its high wages and low quality. Thus America has recorded a chronic external trade deficit. The trade surplus recorded by China against America is overwhelmingly high. To stimulate the US economy, they want to make Chinese products more expensive. Trump imposed a tariff of 25% on 1300 Chinese imports such as high-performance medical devices, industrial robots and marine engineering that the Chinese government focuses on as next-generation core industries. Following Trump’s tariffs, the Chinese government imposed a tariff of 25% on 106 items including American soybeans, automobiles and chemical products aimed at agricultural products and manufacturing, the basis of Trump’s support.
-A shrimp between two whales
However, if this trade war happens in practice, Korea will be directly hit by a bomb. For example, industries like electrical equipment, information technology and a high-tech industry will be damaged. Korea International Trade Association expected as tariffs rise, global trade decreases. They forecast a 6.4% drop in Korean exports. As a nation with an export-dependent strategy of growth, Korea is vulnerable to the rapidly changing economic outbreak of trade war. If so, what is the solution to respond this damage? Korea corporations should thoroughly investigate and prepare for licensing procedure and ambiguous regulations, which are typical non-tariff barriers to major exporting countries. Korean government needs to understand the protection trade measures of major exporting countries in real-time and build a platform for companies to respond early.
Every country in a trade war loses and friends of those countries also lose. In order to cope, Korea needs to diversify its trading partners, in the long term, it is necessary to lower the dependence on high trade. Korean should buy more Korean products to support Korean operated business and help the domestic economy, so that the domestic economy is solid.
