{"id":2204533,"date":"2024-04-03T17:45:41","date_gmt":"2024-04-03T08:45:41","guid":{"rendered":"https:\/\/koreapro.org\/?p=2204533"},"modified":"2024-04-04T20:18:19","modified_gmt":"2024-04-04T11:18:19","slug":"trumps-2024-bid-could-reshape-global-defense-industry-impact-south-korea","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/04\/trumps-2024-bid-could-reshape-global-defense-industry-impact-south-korea\/","title":{"rendered":"Trump’s 2024 bid could reshape global defense industry, impact South Korea"},"content":{"rendered":"

Former U.S. President Donald Trump\u2019s potential return to the White House in 2024 could significantly impact the global defense industry, particularly for South Korean companies.<\/span><\/p>\n

If re-elected, Trump\u2019s <\/span>critical stance<\/span><\/a> on the North Atlantic Treaty Organization (NATO) and his \u201cAmerica First\u201d approach to collective security arrangements could increase pressure on allies to boost defense spending, potentially shifting U.S. defense priorities and intensifying competition in the international arms market.<\/span><\/p>\n

However, it will also provide new growth opportunities for South Korean defense firms, which have seen significant growth in recent years, as U.S. allies could seek to bolster their defense capabilities in response to Trump\u2019s demands.<\/span><\/p>\n

South Korea\u2019s defense industry has grown rapidly with companies like Hanwha Defense and LIG Nex1 making significant strides in the international market.\u00a0<\/span><\/p>\n

Exports are crucial for South Korean defense companies to expand internationally and reduce their reliance on the domestic market. The Middle East, Southeast Asia and Europe have become key export markets for South Korean defense products, as countries in these regions seek to modernize their military capabilities and diversify their suppliers.<\/span><\/p>\n

Should Trump be re-elected, South Korea\u2019s defense industry could see its recent success go from strength to strength. <\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol meets NATO Secretary General Jens Stoltenberg, June 30, 2022.| Image: ROK Presidential Office<\/em><\/p><\/div>\n

TRUMP\u2019S VIEWS ON NATO<\/b><\/p>\n

During his previous term, Trump frequently criticized NATO allies for not meeting the alliance\u2019s target of spending <\/span>2% of their gross domestic product<\/span><\/a> (GDP) on defense. He argued that the U.S. was bearing an unfair burden in providing for Europe\u2019s security and demanded that other member states increase their contributions.<\/span><\/p>\n

In 2018, Trump even <\/span>indicated<\/span><\/a> \u201cmultiple times,\u201d albeit privately, that he wanted to withdraw from NATO if allies did not ramp up their defense spending, reflecting his view of alliances as transactional relationships.<\/span><\/p>\n

If re-elected, Trump will likely continue this approach. He may push for further increases in allied defense spending, seek to renegotiate burden-sharing agreements, or even consider <\/span>reducing U.S. military presence in Europe<\/span><\/a> if he feels that allies are not contributing enough.<\/span><\/p>\n

As European countries face pressure to increase their defense budgets while Russia continues its invasion of Ukraine, they may seek to acquire more military equipment and technology, creating <\/span>new opportunities<\/span><\/a> for South Korean arms manufacturers.<\/span><\/p>\n

GLOBAL DEFENSE LANDSCAPE<\/b><\/p>\n

Although the global defense industry is dominated by major players from the U.S., Europe and Russia, South Korea has emerged as a serious competitor in recent years, with its 2022 defense exports marking a <\/span>140% increase<\/span><\/a> from 2020.<\/span><\/p>\n

For instance, Hanwha Defense secured significant deals, such as the <\/span>$1.65 billion<\/span><\/a> K9 Thunder self-propelled howitzer contract with Egypt in 2022 and the <\/span>$4.65 billion<\/span><\/a> Redback Infantry Fighting Vehicle contract with Australia in 2023. The company has also sold its howitzers to <\/span>Poland<\/span><\/a>, <\/span>Turkey<\/span><\/a>, <\/span>Romania<\/span><\/a> and <\/span>India<\/span><\/a>.<\/span><\/p>\n

Additionally, LIG Nex1 secured multi-billion-dollar contracts to supply its mid-range surface-to-air Cheongung-II missile system to the <\/span>United Arab Emirates<\/span><\/a> and <\/span>Saudi Arabia<\/span><\/a>.<\/span><\/p>\n

A second Trump term could present significant opportunities for South Korean defense companies. NATO member states may seek to fill gaps in their defense capabilities as they ramp up spending to meet Trump\u2019s demands and South Korean companies could capitalize on this opportunity by offering their proven systems and solutions.<\/span><\/p>\n

For example, Hanwha Defense could attract additional buyers from Eastern Europe who are looking to modernize their artillery forces. Similarly, LIG Nex1\u2019s successful export of the Cheongung-II missile system demonstrates the company\u2019s ability to compete in the international market.<\/span><\/p>\n

As Middle Eastern countries seek to fortify their defense capabilities as the war between Israel and Hamas <\/span>threatens to expand<\/span><\/a> and Iranian-backed Houthi rebels continue to <\/span>target ships in the Red Sea<\/span><\/a>, South Korean arms could be an attractive option for countries seeking to enhance their air defense capabilities.<\/span><\/p>\n

South Korean defense companies could also leverage their reputation for reliability, cost-effectiveness and technological sophistication to expand their presence in the U.S. market.\u00a0<\/span><\/p>\n

As the U.S. looks to streamline its defense spending and find more efficient solutions to restock its <\/span>depleted arms stockpile<\/span><\/a>, South Korean firms may find opportunities to partner with U.S. companies or directly compete for contracts.<\/span><\/p>\n

Overall, there is increasing confidence that a second Trump term could create a favorable environment for South Korean defense companies to continue to establish themselves as key players in the global defense industry, as evidenced by Singapore\u2019s sovereign wealth fund holding a <\/span>6.37% stake<\/span><\/a> in LIG Nex1.<\/span><\/p>\n

\"\"

ROK Defense Minister Shin Won-sik and Saudi Defense Minister Khalid bin Salman Al Saud oversee the signing of a defense cooperation memorandum of understanding in Riyadh, Feb. 6, 2024 | Image: ROK Ministry of National Defense<\/em><\/p><\/div>\n

POTENTIAL RISKS<\/b><\/p>\n

However, while a second Trump term presents opportunities for South Korean defense companies, it also brings significant challenges and risks.<\/span><\/p>\n

As other countries also seek to benefit from changes in the global defense industry, South Korean firms may face increased competition from countries like <\/span>Turkey<\/span><\/a> and <\/span>Japan<\/span><\/a>, which have well-established defense industries and could vie for similar export opportunities.<\/span><\/p>\n

One of the most significant risks for South Korean defense companies is the potential recalibration of the U.S.-South Korea alliance under a second Trump administration. Trump has previously questioned the value of U.S. troop presence in South Korea and has <\/span>pressured the country to pay more<\/span><\/a> for the cost of stationing American forces on its soil.<\/span><\/p>\n

If Trump were to follow through on his threats to reduce or completely <\/span>withdraw U.S. forces from South Korea<\/span><\/a>, it could have a profound impact on the country\u2019s defense industry.<\/span><\/p>\n

In the event of a significant reduction or withdrawal of U.S. forces, South Korean defense companies would likely need to ramp up production to meet the country\u2019s own domestic defense needs. This could lead to decreased exports, as firms would need to prioritize supplying the South Korean military to fill the gaps left by the departure of U.S. troops.<\/span><\/p>\n

Such a scenario could limit the ability of South Korean companies to capitalize on potential export opportunities arising from changes in the global defense industry.<\/span><\/p>\n

Another risk for South Korean defense companies is the potential for the Trump administration to impose trade barriers or tariffs to protect American defense firms from international competition.<\/span><\/p>\n

Given Trump\u2019s emphasis on <\/span>protectionist trade policies<\/span><\/a>, he will likely seek to limit the access of foreign defense companies to the U.S. market. This could significantly hinder the ability of South Korean firms to compete effectively with their American counterparts and could limit their growth potential in the lucrative U.S. defense market.<\/span><\/p>\n

Moreover, the unpredictable nature of Trump\u2019s foreign policy and his tendency to make sudden decisions could create uncertainty for South Korean defense companies. Shifts in U.S. priorities or changes in key defense programs could disrupt long-term planning and investment strategies, making it challenging for firms to adapt quickly to new circumstances.<\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol visits a South Korean defense company, Nov. 24, 2022 | Image: ROK Presidential Office<\/em><\/p><\/div>\n

BRACING FOR THE FUTURE<\/b><\/p>\n

As the 2024 U.S. presidential election approaches, South Korean defense companies must prepare for a potential second Trump term and the implications it could have for their industry.<\/span><\/p>\n

In the coming years, these firms will need to focus on diversifying their export markets. This may involve strengthening relationships with other key regions, such as Europe, the Middle East and Southeast Asia, and tailoring their products and services to meet the specific needs of these markets.<\/span><\/p>\n

By establishing a strong presence in multiple regions, South Korean defense companies can mitigate the risks associated with potential changes in U.S. policy or shifts in the global defense landscape.<\/span><\/p>\n

Innovation and technological advancement will also be crucial for these companies to remain competitive in the face of increasing global competition. Investing in research and development to create cutting-edge, cost-effective solutions will be essential to maintain an edge over rival firms.<\/span><\/p>\n

Collaborations with domestic and international partners and the adoption of emerging technologies such as artificial intelligence, robotics and unmanned systems could help local companies stay at the forefront of the industry.<\/span><\/p>\n

Ultimately, the success of South Korean defense companies in the coming years will depend on their ability to adapt to the changing global defense landscape, navigate the challenges and opportunities presented by a potential second Trump term and make strategic decisions that position them for long-term growth and resilience.<\/span><\/p>\n

Edited by Alannah Hill <\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Defense & Security<\/span><\/a>Inter-Korean & Foreign Relations<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

Former U.S. President Donald Trump\u2019s potential return to the White House in 2024 could significantly impact the global defense industry, particularly for South Korean companies. If re-elected, Trump\u2019s critical stance on the North Atlantic Treaty Organization (NATO) and his \u201cAmerica First\u201d approach to collective security arrangements could increase pressure on allies to boost defense spending, […]<\/p>\n","protected":false},"author":10909,"featured_media":2203425,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[21],"tags":[24,26,28],"yoast_head":"\nTrump's 2024 bid could reshape global defense industry, impact South Korea - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2024\/04\/trumps-2024-bid-could-reshape-global-defense-industry-impact-south-korea\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump's 2024 bid could reshape global defense industry, impact South Korea - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Former U.S. President Donald Trump\u2019s potential return to the White House in 2024 could significantly impact the global defense industry, particularly for South Korean companies. 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