(Bloomberg) -- South Korea will take a range of steps to cope with the impact of the US election as it expects “significant” changes should Donald Trump proceed to implement his campaign pledges.
“If the policy stance that’s been stressed by president-elect Trump becomes realized, the impact on our economy is expected to be significant,” Finance Minister Choi Sang-mok said Thursday in a meeting with other economic policymakers in Seoul.
The government will launch new consultative bodies to oversee foreign exchange markets, trade strategies and industrial competitiveness, he said.
South Korea relies heavily on trade for economic growth and officials have expressed concerns that tariffs floated by Trump ahead of the election could weigh on global commerce if he follows through with the proposals.
Trump’s victory sent the won to a two-year low overnight, adding to challenges for South Korea, which meets most of its energy needs through imports. Choi said the government will implement an appropriate step-by-step plan to deal with market volatility if it becomes excessive.
South Korea also faces the risk of having to renegotiate a series of trade and investment deals involving the US should Trump roll back American concessions granted under the Biden administration.
During the meeting, Foreign Minister Cho Tae-yul said Seoul has been in touch with Trump aides and will seek to utilize all diplomatic resources to maintain close cooperation with the Trump administration.
Cho brought up North Korea’s growing nuclear threat and military cooperation with Russia as it wages a war in Ukraine, and said that the US would be “in need of a nation like South Korea” that it could rely on for help to manage global security risks.
The meeting also drew chiefs from the trade, marine, agricultural, science and environmental ministries. Seoul has been preparing contingency plans to prepare for either a Trump or Kamala Harris presidency. Plans include the idea of increasing imports of American oil and gas if Trump were to ratchet up pressure on South Korea over its growing trade surpluses with the US, Bloomberg News reported Tuesday.
South Korea’s economy may contract and lose tens of billions of dollars in exports should Trump impose maximum universal tariffs, according to a study by the Korea Institute for International Economic Policy. A slowdown in trade would make it tougher for the economy to sustain its growth momentum next year and could complicate the pace of monetary easing by the Bank of Korea.
--With assistance from Karl Lester M. Yap.
(Updates with more comments and background)
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