Trump's way poised to backfire

By Park Jung-won

A little more than a month into U.S. President Donald Trump’s second term, the world is reeling from his changes to U.S. policy. On the trade front, his imposition of (or threats to impose) tariffs on multiple trade partners — including U.S. allies — threatens to upend decades of established economic order. And in the security realm, Trump’s eagerness to end the war in Ukraine without serious repercussions for Russia could set a precedent that makes preserving peace in the world’s potential conflict zones, including the Korean Peninsula, far more difficult.

The reciprocal tariffs the Trump administration plans to impose starting April 2 go beyond merely matching tariff levels; they also encompass non-tariff barriers such as subsidies and various regulations. The South Korea-U.S. Free Trade Agreement already eliminates tariffs on most goods traded between the two countries. However, Trump’s proposal to impose a 25 percent reciprocal tariff on all imported steel and aluminum is expected to impact all countries, including South Korea. The U.S. is South Korea’s number one export destination, and South Korea relies on exports for its economic livelihood.

Furthermore, the U.S. has raised issues with South Korea’s value-added tax (VAT), claiming it disadvantages American companies. The U.S. aims to address this by imposing reciprocal tariffs. However, labeling it as a tariff is problematic since VAT is applied to both imported and domestically produced goods.

Considering VAT as a tariff and proposing reciprocal tariffs on countries implementing a VAT system could violate World Trade Organization rules. This action overturns the most-favored-nation principle, a core tenet of free trade upheld since the General Agreement on Tariffs and Trade in 1947.

The Trump administration claims that while South Korea ostensibly pursues free trade through the FTA by abolishing mutual tariffs, in reality, invisible non-tariff barriers prevent American goods from being exported to the South Korean market. As a result, they propose to convert these invisible barriers into a monetary equivalent as a percentage tariff and impose that amount on South Korean goods imported into the U.S. Implementing such a conversion can be highly arbitrary, and in extreme terms, it suggests that the U.S. intends to calculate the trade surplus South Korea has with the U.S. and impose reciprocal tariffs on goods imported from South Korea into the U.S. merely to even the balance. However, bilateral trade imbalances are possible even when the terms of trade are equal, and are not inherently disadvantageous for either economy.

Can the Trump administration’s trade policies truly be considered desirable for the U.S. itself? If the U.S. treats its trade partners this way, global trade volumes will significantly decrease, and high tariffs on various imports will cause domestic prices to rise substantially. The U.S. relies on imports for essential consumer goods and many manufactured products. With rising inflation, interest rates may need to be increased instead of lowered. However, Trump also plans to spur the U.S. economy by implementing tax cuts that may disproportionately benefit the wealthy. The result could be reduced tax revenue and an increased fiscal deficit for the U.S. Despite this, does Trump intend to push forward with such a peculiar closed economic policy during his four-year term?

More seriously, the concern extends to international security and order problems stemming from the U.S. As a representative of the free world and a leader in the international political and security order, the U.S. is moving in a very dangerous direction with Trump's reemergence. Trump appears to be undermining territorial integrity, a core international law principle for maintaining world peace led by the U.S. and its allies for over 80 years, by imposing a ceasefire on Ukraine. This signifies a serious fracture in the international normative order, and the repercussions could be immense.

Trump is pressuring Ukraine to end the war by ceding territory currently seized by Russia. Recovering the 20 percent of its land lost to Russia is considered a futile hope. Russia’s infliction on Ukraine of widespread devastation across the country and significant loss of life may also go unpunished.

Trump is also expressing reluctance to allow Ukraine to become a NATO member. If Ukraine stops the war in its current state, how can it ensure its future security against an authoritarian dictatorship like Putin's Russia? Is it realistic to believe that Ukraine's security can be maintained through peacekeeping by the largely ineffective United Nations? What guarantees are there that Russia won’t recover its strength in three to four years and invade Ukraine again?

The international consensus since World War II has been that nations should not invade and acquire territory by force, as happened frequently in the 19th century. If Trump forces such an unreasonable ceasefire on Ukraine, what does this signify? Does it mean military powers or nuclear-armed countries can invade and annex neighboring countries without consequences? Has the clock of history turned back to the age of imperialism?

The current issue of a unilateral end to the Ukraine war is not merely a matter between Russia and Ukraine. It implies a situation where Ukraine, aligned with the free democratic camp, appears defeated within a framework of authoritarian dictatorships like Russia, North Korea, China, and Iran forming an alliance. If the war ends to Russia’s satisfaction, the lessons that not only Russia but also similar countries will learn could be highly dangerous for the rest of the world.

Amid an impending perfect storm of economic and security turmoil, South Korea, suffering from endless political chaos and a lack of national leadership, is like a candle flickering in the wind. Is it an exaggeration to say that the current situation in South Korea is similar to that of the late 19th century? Are South Koreans unable to learn from the past? If so, it will be difficult for them to avoid the potentially severe consequences of today’s volatile geopolitical winds.

Park Jung-won ([email protected]), Ph.D. in law from the London School of Economics (LSE), is a professor of international law at Dankook University.