제 26 호 Tariff War
Kicker: WORLD
Tariff War
By Myung-Kwan Kang, Editor-in-chief
Have you ever heard of a tariff war? Since the term "tariff war" is part of the topic, I assume you’ve come across it at least once. In 2018, President Donald Trump initiated a tariff war that shook the global economy. He claimed that the United States would no longer be taken advantage of and imposed tariffs on major foreign trading countries. Let’s take a closer look at the tariff war that began in 2018 and continues to this day.
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Background of the Tariff War
The first reason is the rise of U.S. economic protectionism. The United States has been strengthening its protectionist policies to safeguard its domestic industries. This strategy aims to promote job creation and economic growth within the country, particularly by enhancing competitiveness in the manufacturing sector. Such protectionism is intended to raise the prices of foreign goods through the imposition of tariffs, thereby encouraging the consumption of domestically produced products.
Secondly, it stems from changes in the global economic order. As globalization has progressed, the world's economies have become increasingly interdependent. However, the United States has pushed back against this trend by advocating an "America First" approach. This has led to shifts in the global economic landscape, prompting other countries to explore various strategies in response.
Thirdly, the revision of NAFTA is a significant background factor in the U.S. tariff war. The Trump administration sought to renegotiate NAFTA in order to maximize American interests, which had a major impact on trade relations with Canada and Mexico. These changes increased uncertainty surrounding U.S. trade policy and contributed to the backdrop of the tariff war.
Development of the Tariff War
The first major development is the conflict with China. The trade dispute between the United States and China lies at the heart of the tariff war. The U.S. imposed high tariffs on Chinese goods, citing unfair trade practices and intellectual property violations. This has significantly heightened tensions between the two countries and is having a profound impact on the global economy.
The second development involves actions against Canada and Mexico. The United States imposed tariffs on both countries as a means of pressure during the renegotiation of NAFTA. These measures had a negative impact on trade relations with Canada and Mexico and served as a wake-up call to America's other trade partners.
The third development is the renegotiation of NAFTA. The renegotiation of NAFTA was a key element in the United States' tariff war. The U.S. signed a new agreement called the USMCA, which was designed to further strengthen American interests. This change significantly altered the trade environment in the North American region.
Economic Impact
The first concern is the potential slowdown of economic growth within the United States. The tariff war may negatively affect the U.S. economy. High tariffs can lead to an increase in consumer prices, which in turn can reduce consumers' purchasing power. This situation may have an adverse impact on economic growth.
The second issue is the increasing uncertainty for domestic businesses. Due to the tariff war, domestic companies are facing heightened uncertainty. As unpredictability surrounding imports and exports grows, businesses find it more difficult to make investment decisions. This can negatively impact business growth and employment.
The third factor is the variable of interest rate policy. The U.S. tariff policy can also influence the Federal Reserve’s interest rate decisions. If inflation and economic slowdown occur simultaneously, the Fed will have to carefully consider whether to raise interest rates. This could introduce significant volatility into the financial markets.
International Market Reactions
The first is volatility in financial markets. The tariff war is having a significant impact on global financial markets. Investors are reallocating their assets amid uncertain conditions, which is increasing volatility in the stock markets.
The second is the weakening of international cooperation. The United States' tariff policies are undermining international cooperation. Countries are prioritizing their own national interests, which can jeopardize the stability of the global economy. This situation may further escalate tensions within the international community.
The third is the wait-and-see stance of foreign investors. Due to the tariff war, foreign investors are hesitant to invest in the U.S. market. This can undermine confidence in the U.S. economy and may have a negative impact on long-term economic growth.
Impact on South Korea
First, industry-specific effects. South Korea may be affected in various industries due to the U.S. tariff war. In particular, the automotive and electronics industries, which have a significant presence in the U.S. market, are facing concerns over rising prices caused by imposed tariffs.
Second, diplomatic posture. In this situation, South Korea must strengthen its diplomatic posture. While maintaining strong relations with the United States, it is also important to enhance cooperation with China and other countries. This is essential for protecting South Korea's economic interests.
Third, demand for economic reform. The tariff war has exposed structural problems within the South Korean economy. South Korea should take this opportunity to pursue economic reform, which will contribute to long-term growth.
The tariff war that began in 2018 under the Trump administration has reshaped the global trade landscape. What initially appeared to be a domestic protectionist policy quickly escalated into a worldwide economic conflict, affecting major economies including China, Canada, Mexico, and even close allies like South Korea. While the United States aimed to strengthen its own economic standing, the ripple effects of its aggressive tariff strategy have led to market volatility, weakened international cooperation, and heightened uncertainty for businesses and investors alike.
For countries like South Korea, the tariff war has served as both a challenge and a wake-up call—highlighting the need for diplomatic agility and structural economic reform. As the global economy continues to adapt to new trade dynamics, it is essential for nations to strike a balance between protecting national interests and upholding the principles of open and cooperative trade.
Ultimately, the tariff war underscores the complex interdependence of the modern global economy—where unilateral actions can trigger far-reaching consequences, and long-term stability relies on collaborative solutions.
Sources:
https://www.youtube.com/watch?v=G4atXqHkjWM
https://www.youtube.com/watch?v=bg_lbTqrWr8
https://blog.naver.com/mastermindchoi/223790317670
