{"id":2207100,"date":"2024-11-11T16:56:13","date_gmt":"2024-11-11T07:56:13","guid":{"rendered":"https:\/\/koreapro.org\/?p=2207100"},"modified":"2024-11-12T12:07:30","modified_gmt":"2024-11-12T03:07:30","slug":"south-korea-faces-tough-choices-due-to-trumps-hardline-stance-on-china","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/11\/south-korea-faces-tough-choices-due-to-trumps-hardline-stance-on-china\/","title":{"rendered":"South Korea faces tough choices due to Trump\u2019s hardline stance on China"},"content":{"rendered":"

With Donald Trump set to return to the White House, South Korea is bracing for major shifts in its security alliance with the U.S.<\/span><\/p>\n

Days after Trump\u2019s election, President Yoon Suk-yeol ordered the launch of <\/span>consultative bodies<\/span><\/a> to address expected challenges, including demands for increased defense spending and heightened pressure regarding Taiwan and China.<\/span><\/p>\n

But it will not be easy to navigate the growing tensions between Seoul\u2019s biggest security partner in the U.S. and its biggest economic partner in China, posing significant risks for South Korea caught between the two.<\/span><\/p>\n

ALLIANCE UNDER PRESSURE<\/b><\/p>\n

Despite the signing of a <\/span>new five-year Special Measures Agreement<\/span><\/a> (SMA) last week, concerns are mounting that Trump may <\/span>push South Korea<\/span><\/a> to further increase its financial contribution for the U.S. military presence.<\/span><\/p>\n

The SMA, which the allies concluded ahead of the U.S. election, stipulates that Seoul will pay $1.19 billion (1.6 trillion won) in 2026, representing an 8.3% increase from the previous year. Annual adjustments will be linked to the consumer price index, a shift from previous agreements tied to South Korea\u2019s defense budget increases.<\/span><\/p>\n

Trump has a history of challenging allies on defense spending. During his first term, he reportedly demanded that South Korea pay up to $5 billion annually \u2014 a fivefold increase from prior contributions. His return raises the possibility that the SMA could be renegotiated, placing additional strain on South Korea\u2019s defense budget and potentially igniting domestic political opposition.<\/span><\/p>\n

Approximately 28,500 U.S. troops are stationed in South Korea, serving as a critical deterrent against North Korean aggression. Any suggestion of troop reductions or demands for disproportionate cost-sharing could unsettle the alliance\u2019s stability.<\/span><\/p>\n

South Korea faces the task of balancing U.S. demands with its national interests and public sentiment. Increased financial burdens may not be politically palatable domestically, especially if perceived as yielding to unreasonable U.S. pressure.\u00a0<\/span><\/p>\n

However, the government must also consider the implications for military readiness and the broader security environment on the Korean Peninsula.<\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol meets with Chinese leader Xi Jinping, Nov. 15, 2022 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

TAIWAN TENSIONS<\/b><\/p>\n

While Trump\u2019s <\/span>commitment<\/span><\/a> to <\/span>defending Taiwan<\/span><\/a> is far from clear, he may urge allies to adopt a more assertive stance on Taiwan as part of a broader push to confront China.\u00a0<\/span><\/p>\n

South Korea has traditionally maintained a cautious approach, emphasizing the importance of peace and stability in the Taiwan Strait without directly confronting Beijing.\u00a0<\/span><\/p>\n

For instance, in a <\/span>joint statement on Nov. 1<\/span><\/a>, the U.S. and South Korea expressed concern over \u201crecent military drills around Taiwan that escalate tension\u201d and concurred that \u201cno further actions should be taken that could undermine peace and stability across the Taiwan Strait.\u201d But the statement stopped short of explicitly naming China due to diplomatic sensitivities.<\/span><\/p>\n

China is South Korea\u2019s largest trading partner, accounting for about 25% of its exports. In 2023, the ROK\u2019s exports to China totaled <\/span>approximately $102.6 billion<\/span><\/a>, with key industries such as semiconductors, electronics and automobiles heavily reliant on the Chinese market.\u00a0<\/span><\/p>\n

Any deterioration in relations could have substantial economic repercussions, and historical precedents indicate that Seoul\u2019s concerns are not unfounded.\u00a0<\/span><\/p>\n

Following the deployment of the U.S. Terminal High Altitude Area Defense missile defense system in South Korea in 2017, China <\/span>imposed informal sanctions.<\/span><\/a> These included restrictions on tourism, cultural exchanges and certain business operations, costing South Korea <\/span>between $7.5 billion and $15.6 billion<\/span><\/a> in lost revenues.<\/span><\/p>\n

A shift toward a more confrontational stance on Taiwan could invite similar retaliation. South Korean companies operating in China might face regulatory hurdles, consumer boycotts or other forms of economic coercion.<\/span><\/p>\n

U.S.-CHINA RIVALRY<\/b><\/p>\n

Beyond Taiwan, South Korea faces other pressures as the U.S.-China rivalry intensifies. For instance, participating in <\/span>AUKUS Pillar II<\/span><\/a> may provoke negative reactions from China, which views these initiatives as attempts to contain its influence.<\/span><\/p>\n

In addition to exports, South Korea imports essential materials from China, including rare earth elements critical for manufacturing electronics and defense equipment. Any disruption to these imports could impact South Korea\u2019s industrial capabilities.<\/span><\/p>\n

Efforts to diversify trade and investment are underway. South Korea has pursued free trade agreements with nations like Australia, New Zealand and members of the Association of Southeast Asian Nations. Strengthening economic ties with Europe and exploring new markets in Africa and Latin America are also part of its diversification strategies.<\/span><\/p>\n

However, China and the U.S. are its largest trading partners. With Seoul potentially facing deteriorating ties with the former and trade barriers with the latter, it remains to be seen whether Seoul\u2019s efforts to diversify trade will be successful.<\/span><\/p>\n

\"\"

An illustration of goods being transported | Image: Korea Pro<\/em><\/p><\/div>\n

TRADE WAR SPILLOVER<\/b><\/p>\n

Trump has indicated plans to impose a <\/span>60% tariff on Chinese goods<\/span><\/a> and a general 10% tariff on all imports, aiming to protect U.S. industries and reduce trade deficits. Such measures could reignite global trade tensions and disrupt international supply chains.<\/span><\/p>\n

South Korea, with its export-driven economy, could be significantly affected. The U.S. is South Korea\u2019s second-largest trading partner, with exports totaling <\/span>$65 billion<\/span><\/a> in 2023. Key sectors such as automobiles, steel, electronics and machinery are heavily dependent on access to the U.S. market.<\/span><\/p>\n

If the U.S. implements broad import tariffs, South Korean products could become less competitive due to increased costs. Automakers like Hyundai and Kia might face declining sales in the U.S., affecting revenue and employment. Similarly, electronics giants like Samsung and LG could see reduced market share.<\/span><\/p>\n

Aligning with U.S. trade policies against China poses additional risks. Many South Korean companies rely on Chinese manufacturing for components and raw materials. Disruptions to these supply chains could lead to production delays, increased costs and challenges in meeting global demand.<\/span><\/p>\n

While diversifying export markets and supply chains can mitigate some risks, the scale of potential disruptions could be significant for South Korea\u2019s economy.<\/span><\/p>\n

DEFENSE INDUSTRY OPPORTUNITIES<\/b><\/p>\n

Despite the challenges, South Korea\u2019s defense industry may see <\/span>opportunities<\/span><\/a> with Trump\u2019s second presidency. Discussions between Trump and Yoon have highlighted potential collaboration in shipbuilding, naval exports and maintenance.<\/span><\/p>\n

Hanwha Ocean\u2019s <\/span>maintenance, repair and overhaul (MRO) contract<\/span><\/a> with the U.S. Navy in August made it the first South Korean shipyard to secure such an agreement.<\/span><\/p>\n

The U.S. Navy’s MRO market is substantial, estimated at around $15 billion annually. Successfully executing contracts can position South Korean firms for additional projects, boosting the economy and enhancing technological capabilities.For example, in 2020, BAE Systems received a $200 million contract for maintenance work on the USS Boxer.<\/span><\/p>\n

However, these opportunities come with challenges. The U.S. imposes stringent regulations on defense collaborations, including compliance with the International Traffic in Arms Regulations (ITAR) and rigorous cybersecurity standards under the Cybersecurity Maturity Model Certification. South Korean firms must invest in compliance and security measures to meet these requirements.<\/span><\/p>\n

\"\"

U.S. Secretary of the Navy Carlos Del Toro visits Hanwha Ocean to inspect a shipbuilding site and the company\u2019s MRO capabilities, Feb. 27, 2024 | Image: Hanwha Ocean<\/a><\/em><\/p><\/div>\n

PROACTIVE DIPLOMACY<\/b><\/p>\n

Trump\u2019s return to the White House presents South Korea with an array of risks and opportunities.\u00a0<\/span><\/p>\n

On the one hand, increased demands for defense cost-sharing, pressure to adopt a more assertive stance on Taiwan and the potential to be caught in the middle of U.S.-China trade tensions will require careful navigation.<\/span><\/p>\n

But opportunities in the defense sector offer avenues for economic growth and technological advancement, though these come with compliance and security challenges. Balancing the alliance with the U.S. against vital economic ties with China will be critical for South Korea\u2019s stability and economic growth.<\/span><\/p>\n

Seoul will likely engage in open dialogue with Washington and Beijing to mitigate risks and promote regional stability. For instance, Yoon has <\/span>reportedly started practicing golf<\/span><\/a> to pursue closer relations with Trump.\u00a0<\/span><\/p>\n

While there are opportunities for growth and risk mitigation, it remains to be seen if they will be enough to offset the costs of Trump\u2019s likely demands.<\/span><\/p>\n

Edited by Bryan Betts<\/span><\/i><\/p>\n

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

With Donald Trump set to return to the White House, South Korea is bracing for major shifts in its security alliance with the U.S. Days after Trump\u2019s election, President Yoon Suk-yeol ordered the launch of consultative bodies to address expected challenges, including demands for increased defense spending and heightened pressure regarding Taiwan and China. But […]<\/p>\n","protected":false},"author":10407,"featured_media":2207101,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24,26,28],"class_list":["post-2207100","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy","tag-defense-security","tag-inter-korean-foreign-relations"],"yoast_head":"\nSouth Korea faces tough choices due to Trump\u2019s hardline stance on China - 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\/11\/south-korea-faces-tough-choices-due-to-trumps-hardline-stance-on-china\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea faces tough choices due to Trump\u2019s hardline stance on China - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"With Donald Trump set to return to the White House, South Korea is bracing for major shifts in its security alliance with the U.S. Days after Trump\u2019s election, President Yoon Suk-yeol ordered the launch of consultative bodies to address expected challenges, including demands for increased defense spending and heightened pressure regarding Taiwan and China. 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