Why did you choose Trump? After all, it was the economy. Who welcomed the news of the "comeback" the most?

- Trump's election, price impact doubled after COVID-19
- Stock market, business, Trump is not a bad card? Corporate tax cut, deregulation
- Trump-Putin connection restart, war crisis resolved route
- U.S.-Russia trying to block NATO membership and end war
- Ukraine
- Two opportunities that came after Trump's election, foundation for advancement into European defense industry

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: November 7, 2024 (Thursday)
■ Talk: Cha Young-joo, Director of the Institute of i-Asset Economics, Professor Lee Jung-hwan of Hanyang University School of Economics and Finance

- Israel to spend one-sixth of GDP on war, try to emphasize Trump's role
- May prepare for Trump with a card to depreciate the Chinese yuan
- Trump's tariff retaliation is already expected, and even Xi Jinping is hopeful to boost the economy

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): Donald Trump was elected as the 47th president of the United States. Everywhere I go today, I think it's covered with this news. It's probably not just our country. I think the whole world will be the same, what changes will there be? Today, we'll have time to make predictions. Let's talk with the two experts who are in charge of Thursday. Director Cha Young-joo has come to the I Asset Economic Research Institute. Please come in.

◇ Cha Young-joo, Director of the Ai Asset Economic Research Institute (hereinafter referred to as Cha Young-joo): Yes, hello.

◆ Cho Tae-hyun: Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance is also here. Please come in.

◈ Lee Jung-hwan, professor of economics and finance at Hanyang University (hereinafter referred to as Lee Jung-hwan): Yes, hello.

◆ Cho Tae-hyun: How did you see it?

◇ Cha Young-joo: In a way, it ended very blandly. I also had a few broadcasts for the presidential election special, but the content was so sharp that it was turned around. So, even now, it was expected that who would win or not. So let's open the mail. I thought it would go this far, but I caught Seung-gi in the afternoon, and it was surprisingly easy. So the American people definitely pushed the Republican Party all the way to Congress. I can tell you this.

◆ Cho Tae-hyun: The so-called red sweep happened, so how did you see it, professor?

◈ Lee Jung-hwan: Actually, the red sweep happened, and everyone said it was 50-50 at first, so I thought I was nervous, too. In fact, as the conclusion began to be concluded yesterday afternoon, Korean stock prices and U.S. government bond rates were greatly affected. It ended easier than I thought. In fact, there seem to be many opinions that Trump won overwhelmingly, even though he thought he would have a little advantage.

◆ Cho Tae-hyun: The good thing was that I could go to bed early. That's about it, I think I can pick one. Let me ask the professor first. Why was it Trump?

◈ Lee Jung-hwan: First of all, we have to talk about the inflation issue. So whether the Biden administration tried or not, in time because it didn't fully catch inflation after all. And the horses went up by 10%, because the U.S. went up to 8% and 9%. When it goes up once, and then it goes up by 5%, and then it goes up by 3%, it means that the effect is enormous accumulated and accumulated. In Korea, there are some people who say that the price of lunch has changed a lot before and after COVID-19, but recently, in the United States, it costs more than $50 to eat lunch.

◆ Cho Tae-hyun: The price went over 100,000 won.

◈ Lee Jung-hwan: There are people whose income has risen, but there are definitely people whose income has not risen, and the fact that prices themselves have risen has no choice but to act as a negative factor, so I think there were issues other than prices. Although I am not a political expert, the biggest debate this time was the "immigrant debate," so there are issues such as whether accepting immigrants itself helps the U.S. economy or the lives of the American people. And when the immigrant problem comes out, there is no choice but to come up with a security problem. A little too much of the security problem, COVID-19 has created a security vacuum. I think I can tell you that Trump will be the president once again because there have been a lot of accumulated problems that have not been able to solve security issues to the extent that such opinions have been made.

◆ Cho Tae-hyun: In a way, it can be seen as 'the Democratic Party has been judged', what do you think? If Trump were to do this, tariffs would go up, prices would go up, and the global economy would go crazy. There were a lot of these prospects, but I guess the U.S. didn't agree with this, either?

◇ Cha Young-joo: First of all, I think the skin you mentioned was bigger than that. So in a way, the economy stabilized economic growth to about 2% under President Biden. The problem was the price. In some states, housing prices have tripled, and then eating prices have gone up like that, so I would say that the GDP index, which is the sum of the economy, and I think the prices have been quite large. In a way, he attacked Biden in the beginning, but as President Biden came down, Harris defended it a little bit aggressively from a third party's point of view. Even so, my fighting spirit became a bit like that, and one more thing is that I shot Trump a little bit, but when I talk to people in the United States, the SNS effect was huge. ’ That's why the supporters of Trump attacked the Shai vote and the election became a bit radical this time. As a result, I think it is possible to interpret that it is connected to votes by responding to stimulating news provocations without worrying about them.

◆ Cho Tae-hyun: Let's take a look at the stock market. The stock market went up a lot. Should I say that these things have been affected by the resolution of uncertainty?

◇ Cha Young-joo: This is the biggest. First of all, it's to resolve the uncertainty. From the stock market's point of view after resolving uncertainty, Trump is not bad. We often jokingly say, "Personally, I want to be a Democrat, but shouldn't the stock market be a Republican?" I like the Republican Party enough to say that. Because during Trump's first presidency, the corporate tax was originally 33%. I was going to lower it to 15%, but I lowered it to 21% in the course of Congress, but if I say I'm going to lower it again to 15%, there are definitely areas where corporate profits are increased by cutting corporate taxes. The next time you see it, it's deregulation. By easing regulations, U.S. financial stocks have risen a lot today. I think there is a possibility that these parts will appear quite positively. And then new industries. So, we're doing existing industries rather than being eco-friendly, and as tariff policies and things like that are strengthened, anyway, President Biden, Trump, and the president who will come forward, are right to prioritize the United States. There may be some differences, but I think Trump may be better from a company's point of view.

◆ Cho Tae-hyun: Anyway, this may be good for the U.S. stock market, but I don't know what's good because it's having a negative impact on our stock market. We have a stock market segment tomorrow, so we'll do a detailed analysis tomorrow. Let's stop talking about the stock market here. The world situation itself is inevitably affected. The two wars that are going on in the world right now will be affected. Among them, I'm going to talk about Russia first, but when I asked the question, "Who was the most happy about Trump's election among presidents in the world?" both of them chose President Putin. Why did you choose it?

◈ Lee Jung-hwan: In fact, there could be a lot of reasons, but the connection between Putin and Trump this year has been around since before Trump's first administration. Then, as the Biden administration continued to side with Ukraine, the war lasted for a long time, and this is an opportunity for Russia to end it early and end it like a victory for Russia, so Russia is welcome. That was the most difficult situation, but I think I can tell you that it became a route to solve this problem.

◆ Cho Tae-hyun: The word Yoo Yu Sang-jong reminds me of once again.

◇ Cha Young-joo: So in a way, you can give Russia a justification. From this point of view, wasn't there a situation where there was no justification to end the war between each other in a deadlock? However, if future President Trump says he can finish this in a day, like a ceasefire or an end to the war, Ukraine has lost its territory. The second reason for the war was Ukraine's application for NATO membership. Then, from Trump's point of view, I won't let him join NATO. If he does this, as the professor said, he can get a justification and end the war from Putin's point of view. Ukraine is the next most urgent thing.

◆ Cho Tae-hyun: President Zelensky looked very bad.

◇ Cha Young-joo: I think that will happen.

◆ Cho Tae-hyun: Okay. As you said, do you think these things can be taken as some kind of message from an ally's point of view?

◈ Lee Jung-hwan: Isn't 'Protect with your own money' a mess?

◆ Cho Tae-hyun: I keep getting explicit messages.

◈ Lee Jung-hwan: In fact, Trump is very opposed to NATO's defense contribution and the U.S. is protecting Europe. "You are an ally, but you have to pay your own money to protect it," the logic is created, and if you become Trump, you can discuss it at that level. So, we are protecting Ukraine with our money now, but we will not protect it anymore. In fact, if we reduce some support on such a large scale, the situation will inevitably turn around. If you know in advance that the tide will turn, you're going to a truce. If you say that it's going to a ceasefire or an end to the war and that this territory is probably going to be less supported in the United States, it's because Ukraine could be a little more disadvantageous. In fact, this is an issue that connects Korea, so in general, the message that the U.S. will not use its own money to protect other countries is always strongly said. In fact, there seems to be some opinions in Ukraine that it may be finished much faster in terms of giving a message.

◆ Cho Tae-hyun: I think there are pros and cons. I think we're getting a little rough because we became that person. Then, the world has to protect its own country with its own money. Then, won't the defense industry get better and Korea's defense companies especially benefit from it?

◇ Cha Young-joo: It's very good in that part. Weapons are originally very difficult to export once. There were various connections with the government, and there were many, but in a way, we had two opportunities. At first, we started in Southeast Asia when our government kept trying to break through the overseas defense industry and the results came out. At that time, weapons in Southeast Asia were Russian-made and Korean weapons competing against each other. We competed in the bidding, but after the war in Ukraine broke out, our preference for Russian weapons fell sharply. In terms of the foundation for our advance into Europe, as you said, NATO is building a factory in Poland to supply NATO, and Korea also scuffled with the Moon Jae In government to increase the burden of defense costs by five times during the first phase of the project, which could happen again this time. Taiwan is also a problem. In the case of Taiwan, when I asked a question about the semiconductor problem during the election, I took the semiconductor problem back to defense and concluded it. That's why each country has to pay a lot of money to the United States in the end and buy a lot of weapons to protect itself, but weapons are also true. We have no choice but to use one country, one series of weapons. There are many weapons that are incompatible with each other on the Russian side and the American side. Therefore, if we use various weapons, we have problems with ammunition and parts, so if we add to the aspect that the West has no choice but to use our weapons now, it can be seen as quite positive.

◆ That's probably why. Hanwha Aerospace, Hyundai Rotem, and LIG Nex1 The so-called Big 3 defense stocks are all rising yesterday and today. Let's go to the next country. Israel, another country that is fighting another war. Israel has been very explicitly supportive of Trump. Especially Prime Minister Netanyahu. But Israel is in a very difficult economic situation right now. They say the economy is very difficult. Prime Minister Netanyahu also needs an exit, so can Trump give us the gift of an end to the war or a ceasefire?

◈ Lee Jung-hwan: It's an area of diplomatic security, so you can think of it as an issue that depends on how you do it. It's relatively simple because if there's an economic interest, it's actually a matter of sharing some money, but the biggest problem with the Trump administration coming in now is subsidizing earlier rather than economic issues. In fact, there is no reason to oppose these things because they are given to save the U.S. economy, and I think they will continue because it is an issue supported by Congress anyway. This diplomatic and security issue was once said to be big country diplomacy, but wouldn't they go with Ping-Pong diplomacy and emphasize the adventurous role of themselves to step in and solve it? That is why the logic continues that it is difficult for us to respond because of the growing uncertainty in foreign policy and the growing uncertainty in foreign policy. So it's true that Israel is now under a great economic burden. About one-sixth of GDP is now spent on war expenses. a huge sum of money Words are one-sixth of GDP, and almost one-sixth of the entire production is spent on war costs. These things are actually hard to imagine.

◆ Cho Tae-hyun: Unusual.

◈ Lee Jung-hwan: It's a situation that's been used abnormally a lot, so in some way. The characteristic of the so-called big countries is that they don't care about small countries. I think it's an important situation to decide how to guide and solve it as you want. So, uncertainty about that. Uncertainty about foreign security policy. There is a lot of uncertainty about this policy because it is usually like this. There seem to be many opinions that the existing subsidies will not change much because they foster the U.S. industry.

◆ Cho Tae-hyun: Then the possibility that Israel's economic difficulties will rebound due to President Trump's re-election is still difficult to predict.

◈ Lee Jung-hwan: Because this is what the grand compromise has to happen eventually, Trump is going to try to emphasize his role as the protagonist of the grand compromise. Like pulling business negotiations. I met Kim Jong Un in Singapore. What should we do in terms of performance? You can probably say that the uncertainty is a little high.

◆ Cho Tae-hyun: Okay. Then I think we should look at the other country's opponent, Iran. You don't think Iran will like it? I think you must have felt really bad yesterday.

◇ Cha Young-joo: In a way, Iran's news that came out relatively a while ago says that President-elect Trump told Israel to "settle a ceasefire before I take office," but in a way, from Iran's point of view, Iran has endured now even if Israel continues to hit Iran now. I don't know if it's patience or what, but Iran's economy is not that good. It's not a situation that deserves that war, but I've endured this because Israel kept hitting me.

◆ Cho Tae-hyun: I want to counteract, but I've been talking about it.

◇ Cha Young-joo: There were a lot of reasons why we only talked about it. Furthermore, the situation in the Middle East is not like we did in the past, but Saudi Arabia has not budged at all, and in a way, we are about to hold a peace conference in the Middle East led by Saudi Arabia. So I think I should look at it like this. I think Iran has no choice but to stay silent for now. Since the Iranian economy is so bad, it seems that they will make efforts to revive the Iranian economy, and rather, Trump uses Israel and Saudi Arabia rather than using this to hit Iran. Saudi Arabia is not listening, right? So, wouldn't it show that the United States is trying to grow its role in the Middle East? So, from the perspective of the United States, one country. Even if I hit Iran, I don't think I'm in a hurry to hit Iran. So, I predict that it will be a little different from the past, and that Israel will be sweeter. Carefully.

◆ Cho Tae-hyun: Okay. It's a very complicated problem, so I think we have no choice but to watch the situation in the future, and let's look at the last country. If you're a rival of the United States, you should pick China, but China is hosting the National People's Congress, and they said they rescheduled the National People's Congress because of the presidential election, right?

◇ Cha Young-joo: It was supposed to be held in October. The National People's University is held in an even number of months, and I'm going to report on the U.S. presidential election this time, but anyway, from China's point of view, it's very urgent to revive domestic demand, so it's probably about how much money you're going to spend in the domestic economy. However, even if Trump is often unpredictable as a joke, he showed us something in the first period, so he keeps his word and pushes it a little bit violently. Moreover, since Xi Jinping met then, I think he will be able to plan his own strategy. In a way, China seems to have no choice but to ask China to hit less, and from that point of view, there will be policies that need to bow down a little at the beginning. At the end of the year, President Xi Jinping will be in power for good anyway. President Trump ends up with that, so in that sense, I don't say that China is scary in the beginning. If I say anything, I'll keep silent mode and not give you rare earths. Should I not do it like this? It may not be easy to expect China's response right now because it is the type to touch it like this.

◆ Cho Tae-hyun: Okay. What's something that can come out of the National People's University? What stimulus checks will come out, and if Trump becomes Trump, can these stimulus checks become more intense?

◈ Lee Jung-hwan: Basically, what you expect from China right now, what you expect from the stock market, you can think of it as an active fiscal policy. There is one fiscal policy that the government uses to meet the GDP growth target of 5%, and tariffs are a problem if Trump becomes Trump. The Biden administration is very legally tight in high-tech industries, which prevents exports of consumer goods, not only to foreign companies, but also to the entire overseas market by using relevant technologies. Since our technological hegemony is a high-tech industry, export consumer goods as much as you want. If the Trump administration becomes the Trump administration, we will raise all tariffs now, and we are saying very strongly that we will put 60% tariffs on China, and that we will put on US tariffs.
◆ Cho Tae-hyun: What are you trying to do with U.S. prices?

◈ Lee Jung-hwan: I know. That's why the exchange rate should be lowered a little bit. Some say that we should prepare for some of these things by lowering the value of the yuan. Shouldn't these policies be implemented to eliminate the effect of tariffs in a way? In the end, if the U.S. imposes tariffs, it will not be considered retaliatory tariffs, but retaliatory tariffs will have to be discussed again.

◆ Cho Tae-hyun: Okay. Finally, let me briefly ask you about the future of the Chinese economy. Will China's economy get harder in the future? Can we find a chance to rebound?

◇ Cha Young-joo: But I'd like to put some hope on the fact that the target is clear in the end when you look at the really huge fiscal policy and things like this. In the end, it's domestic demand, and we won't do anything else anymore, so I'll say, let's hope a little because President Xi Jinping himself came forward.

◆ Cho Tae-hyun: Okay. What hope can be brought about in the domestic economy. However, not only the domestic economy but also foreign education is important, but isn't the obstacle even bigger here?

◈ Lee Jung-hwan: So if you do universal tariffs, channels such as consumer goods exports that were previously open will inevitably get hurt, so China is also investing a lot in basic investment because April is a high-tech industry and trying to compete through it. This strategy is all a competition for technological hegemony anyway, and in the end, the long-term path across the country, such as quantum computing and semiconductors, is bound to be a competition for it.

◆ Cho Tae-hyun: Okay. I think I can only say that we have to wait and see what the international economy will look like in the future. So far, I have been with Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance and Cha Young-joo, director of the Ai Asset Economic Research Institute. Thank you both for your comments.

◈ Lee Jung-hwan, ◇ Cha Young-joo: Thank you.