South Korean companies are bracing for a potential second Donald Trump term as the U.S. presidential election, poised to be one of the tightest races in history, approaches in just two weeks. Recent polls suggest that Republican candidate Donald Trump could return to the White House. Korean companies are worried that if Trump wins, subsidy benefits may be reduced, and tariffs on Korean products may increase.
The Economist forecasted Trump has a 54% chance of returning to the White House on Oct. 22. U.S. political media outlet The Hill and election analytics site Decision Desk HQ also predicted Trump’s chances of winning at 52%. With polls indicating that Republicans may outperform Democrats in congressional races, there are growing concerns that a Trump-led government will likely face little opposition in Congress.
The Korean battery, energy, and automotive sectors are worried that Trump’s return could lead to scaling back or abolishing the Inflation Reduction Act (IRA). The IRA, which provides subsidies for U.S.-manufactured electric vehicles (EVs), batteries, and solar energy projects, is President Joe Biden’s signature green energy policy. Trump has previously stated that he would revise the IRA if re-elected.
A recent report by the state-run Korea Institute for Industrial Economics and Trade (KIET) projected that if the IRA is repealed or weakened, battery demand will inevitably slow down, which could force companies to adjust their investments in both domestic and overseas EV production facilities.
Major Korean companies, including Hyundai Motor, Kia, LG Energy Solution, SK On, and Samsung SDI, have already made or are planning substantial investments in the U.S.
Some analysts suggest that significant revisions to the IRA may not occur, given that many Korean companies have located their factories in Republican-dominated states. Additionally, Tesla CEO Elon Musk, a vocal Trump supporter, will likely advocate for maintaining EV-related benefits, limiting potential changes.
Korean companies are also closely watching Trump’s proposal to impose a universal tariff on all imports. He has proposed raising tariffs on all imports from 3% to 20% while hiking tariffs on Chinese imports to 60%. Chinese cars made in Mexico could face tariffs of up to 1000%.
If Trump wins the election and imposes a universal tariff of 10% to 20% on all imports, Korea’s steel industry is expected to be particularly hard hit. During his first term, Trump imposed tariffs of 25% on steel and 10% on aluminum imports under Section 232 of the Trade Expansion Act. Korea currently operates under a quota system, allowing the country to export up to 2.63 million tons of steel to the U.S. tariff-free each year. However, exports exceeding this quota are subject to tariffs, and under a second Trump administration, these quotas may be reduced, or Korea could be reclassified as a tariff-liable country.
The U.S. has also been tightening regulations to prevent Chinese steel products from entering the U.S. through third countries. The Korea International Trade Association (KITA) warns that as the U.S. broadens its investigations into steel products, Korea could be labeled as a transit country for Chinese steel, leading to more stringent U.S. trade restrictions.
Some experts argue that Korean companies should brace for uncertainty regardless of the election outcome, as both Trump and Democratic candidate Kamala Harris have advocated “America First” tendencies.
“While the two parties may differ in their approaches, the Democratic Party is also leaning toward economic nationalism,” said Cho Seong-dae, head of the Trade Research Center at KITA. “As the U.S.-China trade war intensifies, uncertainty for Korean businesses will only grow.”
