Trump again after 4 years...How do we shock the economy and security?

■ Host: anchor Lee Jung-seop, anchor Cho Ye-jin, anchor
■ Starring: Lim Eun-jung, professor of international studies at Gongju University, and Lee Jung-hwan, professor of economic finance at Hanyang University,

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN YTN News Special Adviser - 47th U.S. President Trump Elected] when quoting.

[Anchor]
The U.S. presidential election, which the world has been paying attention to, ended with a victory for Republican candidate Trump. In the second period of Trump's presidency, major changes are expected in Korea's economic and security situation. Lim Eun-jung, a professor of international studies at Gongju National University, and Lee Jung-hwan, a professor at Hanyang University's School of Economics and Finance, will be invited to examine the impact of candidate Trump's election today. Former President Trump, who was expected to be extremely close, rather won an unexpected victory. We've almost swept the contenders, and we've just seen them admit Harris' defeat through a local connection.Ma accepted it.Ma also expressed his regret. First of all, should we say that American voters have raised a lot of hands with Trump's slogan?

[Lim Eunjung]
Many people predicted that all elections were close, but I think I can say that the limitations of the polls have been confirmed once again. It is true that he sided with Trump, but on the other hand, it is the so-called regime judgment. I think it's an example of confirming once again that there's really no business in high prices than for any other reason. High prices, whether the party in power is ideologically conservative or liberal, as was the case in Europe, and our society right now. As expected, there's no business. It was not easy to overcome the frame because Trump had put it at the top of the frame as a fighter who also knows how to fight, and he lacked such a strategy. I think the Democratic Party has failed to come up with such strategic alternatives to really break through this.

[Anchor]
The economic issue has been the impact of making a major decision on this result, according to the analysis. Let me ask an economist. If you look at former President Trump's victory speech, he has always made speeches emphasizing his country's priority, but we are worried from our point of view. How will it affect the economy?

[Lee Jung-hwan]
National priority is represented by tariffs. Raising tariffs is a situation that is very burdensome when exporting because Korea is an export powerhouse. Second, there will be economic issues because defense cost sharing is also a political issue. Then, as the U.S. moves toward the Trump economy overall, it is expected that the fiscal deficit will increase. The increase in the fiscal deficit means that bond issuance will increase, and interest rates will rise. In particular, tariffs are also having the effect of raising interest rates, so what it means is that when tariffs go up, U.S. prices go up, and when U.S. prices go up, it becomes more and more difficult to lower the benchmark interest rate. Because there are these channels, the base rate is unlikely to go down for a while because of the negative channels where tariffs go up, inflation goes up, and the U.S. fiscal deficit goes up and interest rates go up. So if you look at the market yesterday, the interest rate on U.S. 10-year government bonds has risen a lot. As it goes up a lot, the Korean foreign exchange market is also hit hard, and the exchange rate is showing these aspects that exceed 1,400 won. Representative policies are economic tariff policies and fiscal deficits, and eventually fiscal deficits caused by tax cuts. These can affect not only the regulation of specific businesses in Korea, but also the global interest rates and exchange rates, and there are channels that can affect the Korean economy.

[Anchor]
If you look back on Trump's first term in office in 2016, he did a lot of unexpected actions as an extension of America's firstism. In many cases, Korea was shocked by the aftermath. In the case of FTAs, such as asking for more defense expenses, renegotiations took place in 2018 and 2019, but if you take power again this time, wouldn't this situation be able to be repeated again?

[Lim Eunjung]
There's a good chance of that. But there are priorities and there will be problems with urgency. Once I may be wrong, but I presume that the most pressing issue as soon as I take office will be the Ukraine issue. Since how to deal with the European situation is related to the economic aspect, it is a matter of extreme interest. So we are very nervous, but we have no choice but to be as nervous as we are. A country like Germany, which is considered to be a NATO ally of Europe, is not in a very bad economy right now, not to mention Ukraine, right? In this situation, as the professor said earlier, if tariffs go up, for example, readjustment of alliances, etc., the pressure on European countries will be very high. Starting with Europe, there are expressions such as "realism." It's either relocation or reconstruction. It's right for us to predict that these things will happen. It's right to get ready. However, to supplement one thing, it's been four years anyway. Since the U.S. has five or four years of parliamentary and parliamentary elections, and administrative presidential elections like ours, if we have to count the number of times, the U.S. has midterm elections every two years, and the number drops like this. Since there is a midterm election in two years, of course, the Republican Party has taken control of the Triple Crown.Nevertheless, he has to undergo an interim evaluation anyway, so how fast he will be in that area. And as Professor Lee said earlier, this is what you say, what you say that is going to be popular, and the repercussions that will appear when you actually realize the policy. I hope that the other Republican policy-making elites go along coordinating with each other on this because those things can be different. I think that's possible.

[Anchor]
There is a considerable impact on the international situation. Looking at Korea's trade situation, isn't Korea highly dependent on exports? Last year, the trade surplus with the U.S. hit $45.5 billion, the highest. Based on this, there were concerns that Trump might target Korea.

[Lee Jung-hwan]
Looking back at Trump's first term, the trade deficit and exchange rate issues continue to emerge. It's the influence of the United States that the trade deficit continues. In fact, the Trump administration is referred to as America First, but how does this trade deficit affect the United States? As there is a big logic that it is taking away jobs in the United States, there is a logic that tariffs should be imposed. Pressing with trade deficits is a basic style because the logic that cheap goods are destroying the manufacturing base of the United States is one of the easiest logic of the Trump economy. Therefore, in order to ease the trade deficit, the contents of the basic business relationship are very emphasized, saying that if we buy things, you should buy other things. In basic economics, it's efficiency. They say that making and selling goods at low prices will increase wealth worldwide. Given the framework of America First, we will raise tariffs under the great logic that if imports increase from abroad, the country's manufacturing base will collapse. There's this basic point of view. And we have to talk about the exchange rate, and the exchange rate is also what we often talk about as the won is weakening, but if the won weakens, it can be burdened. Because things made in Korea can be sold cheaply when going abroad, it has become too devalued with this exchange rate, and it has continued to devalue China. So, there is a story that the first Trump administration has used a lot of such policies, such as putting a lot of pressure on them through the position that the value is too low and pointing out exchange rate adjustments. Under the current situation, I will generally raise tariffs by 10-20% if the policy is implemented. Then, we have a very strong tariff policy on China to raise it to 60%, but what we suffer from is that if we raise this direct tariff, we suffer damage. And then it's called the tariff war, and the fact that the tariff rate goes up to 60% is that the United States will not only raise it against China, but China will also impose retaliatory tariffs on the United States. As economic relations weaken, trade decreases and China's economy is not good recently, so if trade decreases like this, Korea also exports a lot of intermediate goods to China, which can adversely affect exports. In fact, there are two aspects, but there are fewer direct exports to the United States. And I think we can tell you that if the U.S.-China relations deteriorate through retaliatory tariffs, China's economic growth rate will decrease and our exports of intermediate goods will decrease. You can understand that the story of Article 62 earlier is the result of estimating that if these tariff retaliation continues, it will affect not only the United States but also China, which will affect Korea's entire exports.

[Anchor]
And as I mentioned a while ago, the issue of defense cost sharing, about the U.S. military, because South Korea is so beneficial. I've been arguing that I need to pay more because it's a country that lives well. I'm sure they'll ask for a lot of raises this time, right?

[Lim Eunjung]
Trump's language is very simple. Simple is a country that lives well even if it is an ally, a rich country, because it looks forward to a concise message about the ordinary, hard-working people of the U.S. who support them. It's not only about whether it's right to use our financial resources at one time, but also about tens of thousands of our sons and daughters. Of course, it would be no exaggeration to say that the authority of the president of the United States is absolute.E. Especially when it comes to security policy. Even so, it's hard for us to understand where these figures were based that they had to pay $10 billion unilaterally in defense contributions.Anyway, he's looking at the American electorate and he's throwing these numbers. In short, I would like to say that even though Trump will show that attitude as an elected politician in the United States, there are parts that must be carried out through sufficient procedures rather than contracts between individuals, individuals, and individuals. I would like to say that the Korean government needs to be more preemptive. It's a Trump-style strategy after being too defensive or defensive. When making a deal, you throw 10 times, 10 billion dollars, and as I said, you present unfounded numbers and cut them from there. If you try to do business with each other in a fun way in the market, you can do that. It's that kind of approach, and there's something that I think actually worked and we reacted to it. But this time, it may be something that we have to endure, but I think we need to remind ourselves that if we go too defensive or defensive, we can get involved.

[Anchor]
As the professor mentioned, the Korean government is probably preparing countermeasures. But from our point of view, we have no choice but to think about relations with North Korea. Trump has continued to mention his relationship with Kim Jong Un and what direction do you think he will go in the future?

[Lim Eunjung]
I don't see anyone like me seeing that this will be a priority. As I said, the situation in Europe is too urgent. That's because the situation in Europe and North Korea ended up being directly linked. I'm telling you that I don't think negotiations with North Korea on the nuclear issue will be the top priority in any security policy right now. In fact, North Korea recognizes what it has so far, recognizes it as a default value, and negotiates, for example. These are the most worried and afraid scenarios in our society. I also think this is an issue that needs to be discussed very closely with neighboring countries, especially Japan. Because it can be a great game changer. Even if our own nuclear armament theory varies slightly from public opinion polls to public opinion polls, more than 70% comes out when it is high. But the global impact of this is so great that we fully understand nuclear vs. nuclear. As for asymmetric power, such figures come from the logic that we should create such symmetry, but anyway, the impact on the world is so large that I will tell you again about this, but Japan or European countries that are also pre-emptively and have similar concerns as ours, Australia, Canada, and no matter who it is, I will tell you that the era of diplomacy really requires technology and will once again.

[Anchor]
You mentioned that Trump's U.S. needs to respond to it because it can demand a number of things against its allies. And there will be some policy changes, but you mentioned tariffs earlier, but you also hinted at subsidies in the United States and reducing subsidies to foreign companies. However, I think it's a huge burden for Korean companies that are already building factories and investing there.

[Lee Jung-hwan]
You're exactly right. The characteristics of the Biden administration are industrial policy, economic policy, and the return of industrial policy. It can be said that there was such a great willingness to designate specific industries, designate semiconductors and eco-friendly industries, actively subsidize them, attract factories, and have their own supply chain in the United States. When it comes to eco-friendliness, it's called the Inflation Reduction Act, and when it comes to semiconductors, it's called the Chip Act. After all, if both laws subsidize eco-friendly technologies and build semiconductor factories, they are policies that greatly subsidize the transfer of semiconductor technologies to the United States. Samsung Electronics also says it will receive about 9 trillion won in subsidies to build a factory in Texas. Some say that if LG Energy Solution or SK On were not subsidies from the United States this time, operating profit would have been in the red. The scale is enormous. In fact, since it's a lot of money, building a factory costs a lot of money, so the scale is enormous enough to worry about such a deficit. Trump himself thinks that canceling the previous administration's policies is a good direction to make the policy clear, but there are definitely some parts that are difficult to get to easily. Because the semiconductor law is actually necessary in the United States and is a cooperative law proposed by the Republican Party, it is believed that semiconductor subsidies will continue in the future. But it's called the Inflation Reduction Act, IRA. When it comes to eco-friendly technology, when I saw the first Trump term, they said it was false when they went out of the Paris Convention, and they tended not to subsidize eco-friendly technologies, but there was a tendency to message that eco-friendly was a lie. Therefore, there is a lot of concern about reducing subsidies a little more. Of course, since it is a long-term subsidy, it will be given, but it can be considered that there are clear concerns about things like slowing down or reducing the amount every year. In a way, Korea is concerned about its future strategy because many companies are trying to set up semiconductor and secondary battery factories in the U.S. and it is more concerned about eco-friendly and inflation reduction methods than semiconductors. If you look at yesterday's stock price, it can be said that the overall impact of secondary battery stocks has fallen a lot.

[Anchor]
Korea has an economic structure that is highly dependent on exports, so I think we need to respond quickly to the Trump administration. There are also moves that are likely to solidify decoupling with China. So, what should our companies prepare in the future?

[Lee Jung-hwan]
It's not an economic issue. What it means to say that it's not an economic problem is that it's an economically inefficient way. So, there is an argument that the Trump administration's method is to raise tariffs in the United States, so there has been an economic shock by holding high interest rates for a long time to catch inflation, but this is not a reasonable way. The Biden administration's response policy to China is a shield against cutting-edge technology, but we said we would open up manufacturing foam, but raising it through full tariffs is burdensome because all prices of chopsticks and commonly called plastic goods in the United States are going up. So, Korea is also saying that companies under the Trump administration should be sensitive to what political decisions will be made. In other words, there is an aspect that it is also clear that we have room to step in as a political decision. It's hard to get into logic to say that this is completely determined by numbers according to economic logic, but please exclude us. We will actively cooperate with the United States on the supply chain. Please leave us out. We'll build more factories. I personally understand that if you clearly show your intention to advance into support at the corporate level, you can see it as a situation where there is room. After all, this decision is not an economic one. Since it is a political decision, there is room for improvement through corporate lobbying and government efforts.

[Anchor]
I see. In addition to economic issues, as Professor Lim Eun-jung pointed out, the first issues with urgency are likely to be Ukraine and Israel. Do you think the first step would be a move on that?

[Lim Eunjung]
I think that's what I'm going to do. It's a question of how to use it. In our case, we have continued to show off our friendship with Chairman Kim Jong-un, so we are concerned about that. Anyway, going back to Europe, Europe and Putin were on good terms. During my time, I fought back like this, saying, "Wasn't there no war for four years?" Biden, on the Harris administration. But anyway, what kind of negotiations we're going to have with Putin right now is not that possibility, but if we go to cut off support, we'll finally give a message to Europe that you guys do it on your own, and we'll see if there's a negotiation with Putin. Anyway, I'm telling you what you think again and again not only to win votes from voters, but also to spend your money and our sons and daughters on things in other countries and regions, so I think you'll try to settle the war in a way that collects the support that the U.S. has brought in so far. I think what Putin will react to is another variable.

[Anchor]
As Trump was elected, the New York Stock Exchange rose all at once and Bitcoin rose to the 76,000 mark. What do you think?

[Lee Jung-hwan]
The rise in the New York Stock Exchange in the U.S. seems to be two factors. Uncertainty about the regime has been resolved. It is uncertainty that gives a negative factor to the stock market, so you can think of one point where this is resolved. Next, I told you that the biggest feature of the Trump administration is tax cuts. The corporate tax is now 23%, but it is almost certain that it will go down to 15%, so when the corporate tax goes down, the company's profits increase, and when the company's profits increase, the dividends increase. So, some say that EPS indicators will rise by 7% to 8%. It can be said to be a stock valuation indicator. I'm talking about these indicators going up. Eventually, because the rate of return per share increases, the amount of money earned per share increases, so the company's stock price has no choice but to rise. So, if you cut taxes, companies take a lot of them and take a lot of dividends, so from the perspective of the company, it has a good effect from the perspective of the value of the stock, which eventually rose by more than 3%.

[Anchor]
I see. That's all for today. We talked about the impact and prospects of Trump's election today with Lim Eun-jung, a professor of international studies at Gongju University, and Lee Jung-hwan, a professor at Hanyang University's School of Economics and Finance. Thank you for listening to the two of you.