The steel and semiconductor industries of South Korea will take a direct hit if the trade war between the United States and China turns into a global tariff war, panelists said at a seminar organized by the Federation of Korean Industries on Sept. 9.
The experts said the ongoing trade war between the United States and China is likely to continue until at least the 2020 U.S. presidential election. So they called on South Korean companies to deal with the situation with a long-term perspective.
“The U.S.-China trade war and their hegemonic rivalry, which will go on regardless of the result of the election, are adding to uncertainties in the global financial and foreign exchange markets as well as global trade environments,” said former trade minister Park Tae-ho, adding, “South Korean enterprises’ response is very important in that a real economic crisis may arise from not the financial but the trade sector.”
Wang Yoon-jong, chairman of the Korean Association of Contemporary Chinese Studies, remarked that the trade war will not subside within this year because the United States is calling for China to fulfill their agreement to the point of revising its domestic law, China is regarding that point as interference in domestic affairs, and U.S. President Donald Trump will never make a concession ahead of the election.
“The steel industry has been subject to protectionism since even before the first day of the trade war, which means the industry is especially vulnerable to the trade war,” said POSCO Research Institute managing director Lee Yoon-hee, adding, “In the industry, the ratio of export is as high as 40 percent to 45 percent, and Section 232 of the Trade Expansion Act of 1962 and the trade war together will hinder any recovery in exports to the United States for up to 10 years.”
“With the Chinese government accelerating its investment in the semiconductor sector, the prolongation of the trade war can adversely affect Samsung Electronics’ NAND flash memory plant in Xi’an, SK Hynix’s DRAM manufacturing facilities in Wuxi,” the chairman pointed out, advising the companies to further strengthen their alliances with non-Chinese players.