South Korea is contemplating a plan to spice up power imports from the US if Donald Trump wins the election and steps up stress on commerce companions, in keeping with folks aware of the matter.
Officers in Seoul have spent months making ready for a Trump or Kamala Harris presidency, with larger dangers anticipated for his or her trade-reliant nation if Trump wins, stated the folks, who requested to not be recognized as discussions are personal.
A key space below scrutiny is South Korea’s rising commerce surplus with America. The South Korean authorities could urge corporations to spice up their purchases of US oil and fuel if the commerce imbalance turns into a sticking level in a Trump presidency, in keeping with the folks. Different nations that run massive commerce surpluses with the US embody China and Mexico.
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The US election on Tuesday is shaping as much as be a good race between Trump and Vice President Harris. Policymakers world wide are attempting to recreation out what a possible second time period for Trump might imply for Washington’s international coverage, particularly since he has vowed to impose a minimal 10% tariff on all imports and improve tariffs on Chinese language items to as a lot as 60%.
South Korea is a key participant in semiconductor manufacturing, making its cooperation vital for US export management efforts towards China. On the similar time, Seoul will depend on the presence of US troops to discourage North Korea, which is strengthening its ties with Russia and sending troops to help Moscow within the warfare towards Ukraine.
Officers in Seoul have been holding conferences with companies and assume tanks in current weeks to debate post-US election methods. After Trump began his earlier time period, South Korea rushed to seek out methods to spice up power purchases from the US, in keeping with two folks aware of the matter.
The federal government might strategy main oil importers and ask them to boost the share of US purchases, though this doesn’t all the time end result within the anticipated improve, the folks stated. This time, geopolitical dangers within the Center East may present further incentive for corporations to show to the US for imports, they added.
The Asian nation depends closely on imports for nearly all of its power wants and is residence to one of many largest refinery clusters on the earth. Up to now this yr, about 11% of its fuel imports and 17% of its oil imports have come from the US. SK Innovation Co. and GS Caltex Corp. are among the many largest importers.
South Korea’s commerce ministry declined to touch upon the federal government’s plans. SK Innovation and GS Caltex additionally declined to remark.
SK Vitality Co., which operates South Korea’s largest oil refinery, is diversifying its crude shipments resulting from geopolitical dangers within the Center East, whereas US and Canadian oil are barely extra worthwhile, Son Sungchul, head of technique operation, stated on an earnings name Monday. US crude makes up 20%-30% of its complete imports, he stated.
Simply earlier than Trump took workplace in 2017, South Korea’s Ministry of Commerce, Business and Vitality urged the nation’s oil refiners to diversify their crude purchases, saying there’s a necessity to enhance power safety and stabilize costs.
South Korean officers are at the moment working with enterprise leaders to persuade US policymakers and Congress that their corporations have been ramping up funding and hiring within the US over the previous few years and can proceed to take action, stated the folks.
One other concern with a Trump-led White Home is the chance that Washington may abandon the commerce and funding agreements between President Yoon Suk Yeol and outgoing President Joe Biden.
Trump has criticized polices below the Biden administration that supply subsidies to companies that cut back reliance on China and improve manufacturing within the US. Corporations corresponding to South Korea’s Samsung Electronics Co. and Hyundai Motor Co. have benefited from these subsidies.
South Korea has engaged in intensive negotiations with the US through the years to safe exceptions and favors for its companies below laws that restrict their exercise with China.
Trump has made it clear throughout his marketing campaign that he intends to maintain stress on South Korea, referring to the nation as a “cash machine” that ought to shoulder extra of the prices for internet hosting American troops.
In an interview final month, Finance Minister Choi Sang-mok downplayed Trump’s feedback and stated that South Korea would keep its robust funding within the US whatever the election end result.
Most South Korean companies count on commerce obstacles to rise and their earnings to take a success after the US election, in keeping with a survey launched final month.
South Korea’s economic system might shrink by as a lot as 0.67% if Trump wins the election and follows by on his promise to impose most common tariffs, which might lower exports by tens of billions of {dollars}, in keeping with a research by the Korea Institute for Worldwide Financial Coverage.
A slowdown in exports would add to the uncertainties going through South Korea’s economic system, which barely grew final quarter, avoiding a technical recession. The information got here after the Financial institution of Korea lower its benchmark rate of interest final month, beginning a coverage easing that officers hope will enhance financial momentum.
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