(Bloomberg) -- South Korean companies expect greater trade barriers and geopolitical tensions after the US presidential election with tariffs topping the list of concerns, regardless of whether Donald Trump or Kamala Harris wins.
About two-thirds of 300 manufacturers surveyed by the Korea Chamber of Commerce and Industry said they expect trade protectionism to intensify in 2025. More than half of respondents also said geopolitical risks would increase next year in the midst of Russia’s war on Ukraine, conflict in the Middle East and North Korea’s nuclear arms development, according to the survey released Monday.
South Korea is one of the world’s biggest exporters with its economy highly dependent on demand from abroad. Companies such as Samsung Electronics Co. and Hyundai Motor Co. are embedded across supply chains for semiconductors, automobiles, refined oil and other products. That means the economy can provide an early indication of changing trends in global exports, the tech cycle and the impact of US trade policy.
The survey, conducted earlier this month, showed that US tariff policy is the biggest subject of interest in both the Republican and Democratic presidential campaigns. Still, the interest is heightened in the case of a Trump victory.
Trump has vowed to ramp up tariffs on China, which is South Korea’s biggest trading partner. His opponent, Vice President Harris, plans to raise corporate taxes, a move that might slow growth and weigh on purchases from abroad. A slowing of global commerce under heavier restrictions and weaker demand would be bad for South Korea.
A global wave of monetary easing is also weighing on the thinking of South Korean companies, with 60% of them worried the local currency may stay relatively strong and hurt their export competitiveness.
The Bank of Korea pivoted on policy earlier this month by cutting its key interest rate by a quarter-percentage point, following a half-point reduction by the Federal Reserve in September. Faster reductions in US rates would likely support the won against the dollar.
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