See More on Facebook

Analysis, Economics

Brace for a trade war

The Korean government must make all-out efforts to minimize impact of US-China conflicts.


Written by

Updated: March 27, 2018

A US-China trade war is brewing. The US administration announced Friday that it would impose tariffs on up to $60 billion in annual imports from China to punish Beijing for what President Donald Trump described as the theft of American technology and Chinese pressure on US companies to hand it over.

China hit back. Beijing announced plans for retaliatory tariffs on $3 billion of US imports, though that reaction was technically in response to earlier steel and aluminum tariffs. The list covers 128 products including fruit, pork and steel pipes.

The Chinese ambassador to the US did not rule out his nation scaling back the purchase of US government debt if the two nations end up in a trade war. China is the largest foreign holder of US Treasurys, with $1.17 trillion in holdings.

Both sides have revealed a determination to fight, raising fears of a total trade war.

“This is the first of many” trade actions, US President Trump said as he signed the executive memorandum that would impose the retaliatory tariffs.

China “firmly opposes” tariffs and “would fight to the end” of a trade war, the Chinese Embassy in Washington said in a statement.

If the Group of Two’s fight for economic hegemony rages, South Korea cannot but bear the brunt of it.

China and the US are South Korea’s two largest trading partners, with China accounting for 25 percent of its exports and the US 12 percent.

If the nation’s exports shrink as the two superpowers bump into each other, its export-driven economy will be severely hit. Trade accounted for 68.8 percent of South Korea’s gross domestic product last year.

Furthermore, the share of intermediary goods in the nation’s exports to China is as high as 79 percent. China processes them into finished products to export to the US. If the US restricts imports from China, the nation’s exports of intermediary goods to China will inevitably suffer heavy damage.

The problem is Washington and Beijing are pressing their trading partners to take their side.

If it takes one side rashly, South Korea will face harsh consequences, such as US tariffs and China’s economic retaliations as it did for hosting a US Terminal High Altitude Area Defense antimissile system. When the two giants clash, South Korea will inevitably be caught in the crossfire.

A larger issue is the effect of US-China trade war upon North Korean threats. If conflicts between Washington and Beijing worsen, the US-North Korea summit set for May could falter.

China, a close ally of North Korea, has so far joined forces in imposing UN sanctions on the North. A trade war is a war, too. Should the sanctions crack, with China somehow opening a backdoor for trade with Pyongyang, dialogue with North Korea will likely become pointless.

The government in Seoul clearly needs a sensible way to defend national interests from a tug of war between the US and China.

The Moon Jae-in administration takes the view that the national security is one thing and economy is another. Moon asked the government to respond to trade issues “confidently and resolutely,” but the request rings hollow, given the lack of means and power to settle them in Seoul’s favor, and rather makes it harder to make proper responses.

If a trade war expands into a Cold War, South Korea will be in for difficulties not only in trade but also in security. Dependence on the US for security and on China for exports will no longer work.

If the nation doesn’t play all its cards to minimize the impact of a US-China trade war, it will risk falling into a serious crisis.

A nationwide response system should be established. The government must draw up comprehensive strategies, including a plan for the worst-case scenario.

It ought to step up monitoring of the relations between the US and China, and proactive measures on trade issues are urgent. In the long term, efforts should be accelerated to diversify export markets.

(This article originally appeared in the Korea Herald)



Enjoyed this story? Share it.


The Korea Herald
About the Author: The Korea Herald is the nation’s largest English-language daily and the country’s sole member of the Asia News Network.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Analysis, Economics

Opinion: One Belt, One Road: We must secure our interest

Shah Husain Imam argues in the Daily Star that Bangladesh must put its interests first in joining China’s One Belt, One Road initiative. The ancient Silk Road, of which the Belt and Road Initiative is a gigantic new avatar, dates back to the Chinese Han Dynasty’s westward expansion more than 2100 years ago. The Road derived its name from the lucrative silk trade along the routes through which it branched into what are today the central Asian countries Kyrgyzstan, Tajikistan, Kazakhstan, Uzbekistan, Turkmenistan, Afghanistan, as well as present-day Pakistan and India to the south. These routes eventually spanned 4,000 miles to Europe. Interestingly, silk was regarded as more precious than gold as a commodity in those times as if to convey the misty romanticism with the old world charm about a fine fabric. At any rate, the Silk Road by no means offered silken smooth passage to travellers like Marco P


By Daily Star
September 21, 2018

Analysis, Economics

US exempts Korean steel from import tariff

The move is seen as a positive signal for the local steel industry. Steel products made by South Korea’s SL Tech has been excluded from the US’ steel tariffs, marking the first case of exemption since the US imposed a quota on Korean steel shipments this May, industry sources said Thursday. The US Commerce Department earlier this week accepted US medical device manufacturer Micro Stamping’s request for a tariff exemption on ultrafine steel tubes imported from Korean steel company SL Tech. Micro Stamping uses ultrafine steel tubes made by SL Tech to produce medical equipment. Korean steelmakers viewed the decision as a positive sign of a higher possibility of tariff exemptions, while remaining cautious over whether the same decision would be applied to steel products used for construction and household appliances.


By The Korea Herald
September 21, 2018

Analysis, Economics

The aftermath of super-Typhoon Mangkhut

Typhoon Mangkhut, which swept through the Philippines, Hong Kong and Southern China over the weekend will go down on history as one of the regions most powerful storms in years. The Philippines In the Philippines, the aftermath of the storm which locally bore the name “Ompong” has been devastating. More than half a million people have been impacted and the latest death toll shows that the typhoon claimed the lives of at least 74 people and injured 74 more. As many as 55 people are still missing. The majority of those casualties are related to the dozens of landslides that tore through the Cordillera Administrative Region, a gold-mining zone. The search effort for those who are still missing has been slow-going. Major roads were rendered impassable, making heavy e


By Quinn Libson
September 19, 2018

Analysis, Economics

How a new party trumped the ruling PDP in Bhutan’s primary polls

In its third election as a full-fledged democracy, Bhutanese came out in large numbers to oust the ruling People’s Democratic Party run by Harvard-educated Tshering Tobgay. Come October 18 and Bhutan will witness a close fight between one of its oldest political parties – Druk Phuensum Tshogpa (DPT) – and Druk Nyamrup Tshogpa (DNT), a new party that has gained popularity in the recent past. The tiny Himalayan kingdom – called Druk Yul in Bhutanese (Land of the Thunder Dragon) – is nestled between economic rivals China and India. It opened up to the world as late as the 1970s. Before Bhutan became a two-party parliamentary democracy in March 2008, the Wangchuck hereditary monarchy wielded power from 1907. On September 15, Bhutanese


By Lamat R Hasan
September 19, 2018

Analysis, Economics

China hits back with tariffs on US$60b of US goods in trade war

China has hit back with reciprocal tariffs after President Trump imposed tariffs on over $200 billion of Chinese goods. China will impose tariffs on US$60 billion (S$82.3 billion) worth of US goods as retaliati


By The Straits Times
September 19, 2018

Analysis, Economics

Trump targets China with more tariffs

Trump slaps tariffs on US$200b of Chinese goods in sharp escalation of trade war. United States President Donald Trump on Monday (Sept 17) defied warnings and escalated the trade con


By The Straits Times
September 18, 2018