[Trump 2.0 Administration Begins] Industries Split in Outlook…Semiconductors and Automobiles Face Challenges, AI and Biotechnology Benefit
"From carrot (subsidies) to stick (tariffs), from friend-shoring (diversification of supply chains) to on-shoring (investment in the U.S.)." As the Donald Trump administration officially begins on January 20 (local time), South Korea and the rest of the world are closely watching the industrial policies of the increasingly visible "Trump 2.0 era." In particular, the United States is the second largest destination for South Korea's exports, following China. Last year, South Korea exported $133 billion worth of goods to China and $127.8 billion worth to the United States. Major exports to the U.S. included automobiles, general machinery, and semiconductors. Given that South Korea's economy heavily relies on exports, the country is naturally highly sensitive to changes in the U.S. industrial policy. According to industry sources on January 20, sectors such as artificial intelligence (AI), space industry, biotechnology, and shipbuilding are expected to benefit in the "Trump 2.0 era." On the other hand, industries like secondary batteries, automobiles, semiconductors, and steel are anticipated to face challenges. Samil PwC highlighted the key policies of the Trump administration as follows: ▲ increase in trade tariffs (strengthening protectionism) ▲ corporate tax cuts (enhancing pro-business policies) ▲ curbing illegal immigration (restricting free movement of labor) ▲ America First policy (shifting from global leadership to transaction-based alliances) ▲ expansion of fossil fuel industries (retreat from environmental policies). It further classified the sectors into those likely to benefit and those expected to face challenges, with IT (especially AI), healthcare, aerospace and defense, shipbuilding, and petrochemicals being the beneficiary industries, and steel, semiconductors, automobiles, and secondary batteries being the sectors at risk. Oh Sun-joo, senior researcher at Samil PwC Management Institute, stated, "The second Trump administration is expected to pursue even more aggressive protectionism compared to the first. If trade wars escalate between major countries, it will lead to a decline in global trade volumes, which will inevitably impact South Korea's export-oriented economy." She also analyzed, "The renegotiation of trade agreements such as the USMCA (United States-Mexico-Canada Agreement) and the Korea-U.S. FTA (Free Trade Agreement), along with the increasing geopolitical risks, will accelerate the restructuring of supply chains centered around the U.S., causing a re-emergence of global supply chain risks." Park Tae-ho, a professor emeritus at Seoul National University and former head of the Trade Negotiation Bureau, stated, "The second Trump administration is expected to halt outsourcing abroad and expand subsidies for key domestic industries such as steel, automobiles, defense, energy, and AI, while also implementing corporate tax cuts in favor of pro-business policies. Additionally, it is anticipated that the administration will push for increased infrastructure investment and active policies to stimulate the domestic real economy." ◆ Semiconductors and Secondary Batteries: South Korea's Key Export Industries Expected to Struggle The sectors most affected by Trump's return, where concerns are becoming a reality, include semiconductors, internal combustion engine vehicles, electric vehicles, and secondary batteries. Among these, semiconductors are a core industry that account for 22% of South Korea's total exports. The Trump administration holds a negative view regarding the subsidy provisions of the semiconductor law (CHIPS and Science Act), also known as the "U.S. Semiconductor Support Act," which was enacted by the previous Biden administration in 2022. As a result, there is a high likelihood that subsidies for foreign companies will be reduced. Trump also advocates for high tariffs, arguing that foreign companies should maintain semiconductor factories within the United States. In particular, regulations related to semiconductors concerning China are expected to intensify. Experts predict that China's plans for semiconductor self-sufficiency will become even more challenging with Trump's return to power. In other words, the intensified containment of China could result in South Korean companies benefiting indirectly. For this reason, experts consider securing a position as a key partner to the U.S. in the high-performance semiconductor sector as crucial. Additionally, as significant changes are expected in the U.S.'s existing semiconductor policies, experts advise that it is necessary to prepare response strategies for various potential scenarios. Park Yoo-ak, an analyst at Kiwoom Securities, stated, "We must also closely monitor changes in the U.S.'s attitude toward Taiwan." He added, "The second Trump administration may use its relationship with China to pressure Taiwan's TSMC to accelerate its U.S. production roadmap. If this happens, the Taiwanese government may respond strongly, and TSMC could pass on the tariffs imposed by the U.S. to its customers (in the U.S.). If such issues arise, it could dampen investor sentiment in the AI industry." ◆ Universal Tariffs and IRA: Potential Obstacles for the Automobile and Related Industries Automobiles became South Korea's top export item last year, with $34.2 billion worth sent to the U.S. alone. For Hyundai and Kia, the U.S. accounted for 42% of their total exports as of 2023, with 920,000 out of 2.2 million units sold in the U.S. The United States has pointed to South Korean automobiles as a major cause of its trade deficit with South Korea. As a result, there is speculation that the Trump administration may attempt to reduce imports of South Korean vehicles. A prime example is the "universal tariff." The term refers to the imposition of a 10-20% tariff on all imports, regardless of product or country, with the aim of protecting domestic manufacturing jobs in the United States. If the universal tariff is implemented on South Korean automobiles exported to the U.S., a decline in price competitiveness would be inevitable. Previously, S&P Global analyzed that if a 20% tariff were imposed on South Korean cars, Hyundai and Kia's earnings before interest, taxes, depreciation, and amortization (EBITDA) could decrease by up to 19%. In its "2025 Economic and Industrial Outlook" report, the Korea Institute for Industrial Economics and Trade (KIET) stated, "The Trump administration's policies on the automobile industry, such as the imposition of universal tariffs, the Inflation Reduction Act (IRA), and the repeal of fuel efficiency regulations, will significantly affect our automobile industry's exports and production, increasing uncertainty." The report also added, "While there may be room for negotiation with countries with which Free Trade Agreements (FTAs) have been signed, the imposition of tariffs will lead to a response from our companies by expanding local production in the U.S., which will have a significantly negative impact on domestic production and exports." It also added, "There is a limit to excessively lowering vehicle prices out of concern for additional tariffs, and diversifying export markets is challenging due to the rising competitiveness of Chinese companies." Electric vehicles and secondary batteries are encountering obstacles from all directions. The Trump administration's retreat from environmental policies and the reduction in IRA support are leading to a lack of demand for electric vehicles, and this negative impact extends to secondary batteries. The oversupply of electric vehicles in China is also a red flag for South Korean companies. Demand for electric vehicles is slowing down, adding to the challenges. However, experts believe that in the case of the IRA, the focus will likely be on reducing the scale of support rather than a complete abolition. Oh Sun-joo, senior researcher, predicted, "Given the continued slowdown in electric vehicle demand since 2023, if the benefits of the IRA are eliminated, the profitability of secondary battery companies is expected to worsen." Professor Park Tae-ho advised, "South Korean companies that have invested in fields such as secondary batteries, electric vehicles, and solar panels in the U.S. need to prepare for the possibility of the elimination or reduction of the Advanced Manufacturing Production Credit (AMPC) for these production facilities." The World Bank (WB), which forecasted a global real GDP growth rate of 2.7% this year, the same as last year, analyzed that if the Trump administration imposes a 10% universal tariff, global growth would decrease by 0.3 percentage points. ChatGPT를 사용하여 번역한 기사입니다.
