If Democratic candidate Kamala Harris wins the election and takes office, 

we expect the US and Korea to continue enhancing cooperation in the defense sector for the foreseeable future. 

 A second Donald Trump administration would likely result in a major setback to Korea-U.S. defense industry cooperation.

Trump is primed to focus government efforts on supporting the American defense industry and pushing a Buy American policy.

Hello, I am Soonhyung Sim from the Machinery and Defense Industry Division at the Korea Institute for Industrial Economics and Trade (KIET).

In this video, I will provide a brief overview of how the 47th U.S. presidential election could impact the Korean defense industry and discuss potential response strategies.

If Democratic candidate Kamala Harris wins the election and takes office, we expect the US and Korea to continue enhancing cooperation in the defense sector for the foreseeable future. 

The U.S. is pursuing closer defense industry collaborations with its allies to mitigate supply chain risks.

U.S. defense actors are concerned about disruptions to the supply of semiconductors, batteries, and ship maintenance, repair, and overhaul (MRO) products and parts.

Representatives from Korea and the U.S. are currently hammering out a Reciprocal Defense Procurement Agreement (RDP-A).

A Harris administration would likely ensure that it comes into effect, which would spark more forward momentum in defense industry cooperation.

We could expect more joint R&D initiatives with the U.S., as well as the further opening of procurement markets in both countries. 

The two allies would also be more likely to coordinate efforts to address raw material supply risks.

At the recent NATO summit, the U.S. declared its intention to expand defense industry cooperation with its Indo-Pacific allies, which include Korea, Japan, and Australia.

A Democratic U.S. administration is more likely to facilitate expanded regional and regional cooperation, 

which could help foster growth for players in the global defense industry value chain.

In addition, a Harris administration is likely to continue supporting Ukraine, 

which would in turn fuel the ongoing boom in Korean defense exports.

Strong exports have attracted investment in the domestic defense sector, and U.S. support for Ukraine would help ensure the continuation of this trajectory.

Local production of Korean weapons systems and defense products overseas may rise in the short term, which could exert some negative impacts, 

but domestic investment is still likely to increase, as a substantial number of parts and components necessary for local production will need to be produced and sourced domestically.

A second Donald Trump administration would likely result in a major setback to Korea-U.S. defense industry cooperation.

Trump is primed to focus government efforts on supporting the American defense industry and pushing a Buy American policy.

This could jeopardize recent efforts at cooperation in joint weapons system development, and more importantly compromise Korean firms’ entry into U.S. defense contractors’ supply chains.

A key concern for Korean stakeholders is the possibility that a Trump administration would look to tilt the Korea-U.S. RDP-A to favor the U.S., assuming the agreement is not concluded before the election. 

And if under a Trump administration the war between Russia and Ukraine comes to a resolution, the prospects for Korean defense exports would dim considerably. 

Korean exports of ammunition in particular would probably fall in the event of an end to or de-escalation of the conflict. 

In addition, Trump could potentially ease export controls on Middle Eastern countries.

This too would pose a threat to Korean defense exports,

because the administration of current president Joe Biden has placed restrictions on countries flagged as human rights violators, such as Saudi Arabia and the UAE.

If Trump relaxes these controls, Korean firms would likely face stiffer competition with American defense companies in those key markets.

A Trump administration may hike the U.S. defense budget, but the effects of a larger budget would serve to benefit American defense contracts more than their Korean competitors,

even if greater spending did end up boosting Korean exports.

Given the uncertainty surrounding the outcome of the U.S. presidential election, a flexible policy approach is needed to adapt to the any shifts in the U.S. political landscape. 

The Korean government should first of all reinforce inter-ministerial cooperation and support to sustain the current export boom.

But is also essential to formulate strategies to deal with a sudden change in the Korea-U.S. defense cooperation relationship. 

Specifically, Korea needs to gird itself for a scenario in which the U.S. pivots back to isolationism,

while at the same time designing plans to expand defense cooperation and exports with a U.S. government focused on building a reliable defense supply chain.

For the Korean government, it is crucial to bolster inter-ministerial support for technology transfers, joint development, and localized production of Korean arms, 

with a special focus on promising export markets such as Eastern Europe. 

At the same time, we need to be ready for more intense global competition that would emerge from the normalization of supply chains in advanced countries. 

Korea also needs plans in place to deal with raw materials shortages, a setback in the RoK-U.S. defense relations, and other supply chain risks.

This concludes my presentation on the potential impacts and response measures related to the 47th U.S. presidential election on the Korean defense industry.

We appreciate your continued interest in the Korea Institute for Industrial Economics & Trade’s defense industry research.

Find us online at http://www.kiet.re.kr/en, or on SSRN, Instagram, and YouTube. Have a great day.

 

Overall, Trump would be likely to impose stricter origin reporting requirements on products exported to the U.S.,

and a GOP administration would be more inclined to conduct rigorous investigations and tariffs aimed at preventing indirect exports of sensitive goods and materials. 

These and other measures could pose a considerable burden on Korean steel exports and complicate efforts to establish operations in the U.S. through value chain integration.

Hello. I am Jae-yoon Lee,

Director of the Materials and Sustainability Division at the Korea Institute for Industrial Economics and Trade (KIET).

Today, I will provide a brief overview of the potential impact of the 47th U.S. presidential election on Korea‘s steel industry 

and discuss the ways in which players in the steel sector (both public and private) might respond to the results of the election. 

As the steel industry is a major source of international trade frictions and a key target of climate and environmental regulations,

the outcome of the election in November is expected to have a significant impact on the trade and industrial environment surrounding the steel sector.

If the Democratic Party retains power, it is likely that Kamala Harris would work to resume negotiations on the Global Arrangement on Sustainable Steel and Aluminium (GSSA),

which are currently on hold. The implementation of the GSSA could lead to the formation of trade blocs dividing the global steel trade into two camps. 

Moreover, a Harris administration could push aggressively for global carbon neutrality,

intensifying competition among major steelmaking countries to develop and commercialize competitive green steel technologies.

On the other hand, if Donald Trump and the Republicans come to power, we can expect a resurgence and intensification of tariff and non-tariff-based protectionism,

accompanied by more intense pressure on steelmakers to reorganize their raw materials supply chains.

Both parties, however, have platforms that advocate for policies designed to revitalize the U.S. manufacturing sector and expand investment in eco-friendly infrastructure.

Taken together, these efforts could bolster the capabilities of the U.S. steel industry.

Now, let’s take a closer look at how the results of the presidential election might affect Korean steel exports.

A Harris administration could feasibly look to impose a system of carbon tariffs,similar to the Carbon Border Adjustment Mechanism being phased in by the European Union.

This could influence other countries to adopt similar policies, 

which could end up posing a significant threat to the Korean steel industry, which relies heavily on exports of carbon-intensive steel plate.

If Trump and the Republicans win, Korea should prepare itself for stricter enforcement of Section 232 of the Trade Expansion Act, which authorizes the president to control imports of goods or materials deemed a threat to national security. 

Korea has maintained a steel trade surplus with the U.S. since 2018 despite Section 232, which puts it in an awkward position as an advocate for trade deregulation.

Overall, Trump would be likely to impose stricter origin reporting requirements on products exported to the U.S., 

and a GOP administration would be more inclined to conduct rigorous investigations and tariffs aimed at preventing indirect exports of sensitive goods and materials.

These and other measures could pose a considerable burden on Korean steel exports and complicate efforts to establish operations in the U.S. through value chain integration.

Demand for Korean steel is stagnating even as global competition grows fiercer by the day. 

To minimize the potential negative impacts of the upcoming U.S. presidential election, 

the Korean steel industry needs overseas investment, export, and supply chain restructuring strategies to guide decision-making in the event of either election outcome. 

Korean also needs to strengthen its trade diplomacy. 

The ongoing shift toward green steel production is inevitable, 

 and all players in the Korean steel sector should focus their efforts on decarbonizing steelmaking and enhancing the competitiveness of green Korean steel.

Today, we have explored the potential impacts of the 47th U.S. presidential election on the Korean steel industry and the way forward for Korean steelmakers. 

We appreciate your continued interest in the Korea Institute for Industrial Economics & Trade’s research on the steel industry.

Visit our website at at http://www.kiet.re/kr/en, 
or find us on SSRN, Instagram, and YouTube. Have a good one!

 

Regardless of the outcome of the 47th U.S. presidential election,

it is imperative to proactively strengthen measures to counter China‘s influence in the semiconductor supply chain, particularly regarding NAND flash technology.

Hello, I'm Kyung Hee Kwon from the ICT and Emerging Industry Division of the Korea Institute for Industrial Economics and Trade (KIET)

In this video I will discuss how the 2024 U.S. presidential election affects Korea’s semiconductor industry

 and what Korea can do in response.

The CHIPS and Science Act of 2022 reshaped the global semiconductor landscape around American interests. 

When a new administration takes over, there are concerns about how it might affect this law and its many provisions. 

However, I don’t see significant differences between the candidates on this issue.

Some worry that a Trump presidency could lead to reduced CHIPS and Science Act subsidies and tax credits for Korean companies investing in U.S. facilities.

But the CHIPS Act itself was originally designed and promoted during the Trump administration.

Semiconductors are the cornerstone of artificial intelligence (AI) and related advanced industries, and represent Korea’s flagship industry.

While a Trump victory might introduce some uncertainties, the risk of him eliminating or reducing support for major Korean companies seems low.

In fact, regardless of the outcome of the presidential election this year, 

it seems increasingly likely that the U.S. will eventually pass another federal-level semiconductor support law.

One candidate is the Semiconductor Technology and Research (STAR) Act, a bill that offers a 25% tax credit to U.S. fabless companies. 

The STAR Act was proposed mostly by members of the House Select Committee on Strategic Competition with China.

A more pressing concern is the rapid rise of Chinese semiconductor companies, which are becoming increasingly independent and self-sufficient.

For example, Huawei smartphone shipments, which declined significantly during the Trump administration,

grew by a remarkable 170.4% from the first quarter of 2023 to the first quarter of 2024.

Even accounting for shipments of phones sold by former subsidiary Honor, Huawei sales are still below the 2019 peak of 240 million units. 

However, shipments are expected to rebound significantly in 2024, reaching between 100 and 150 million units.

HiSilicon, Huawei‘s fabless chip design subsidiary, saw a remarkable 500% increase in sales in 2023, despite the global semiconductor downturn.

The reason the smartphone market is so important is because it is a crucial sales channel for Korean semiconductor manufacturers.

Annually, somewhere around 1.2 to 1.3 billion smartphones are shipped globally.

Samsung Electronics and Apple account somewhere under 600 million, while Chinese companies like Huawei, Xiaomi, Oppo, and Vivo make most of the remaining 800 million or so smartphones. 

Currently, Chinese firms that design and manufacture smartphone components have a negligible share of this enormous market.

But if major smartphone OEMs start putting SMIC-manufactured APs designed by HiSilicon, NAND flash memory from Yangtze Memory (YMTC), and DRAM from Changxin Memory (CXMT) in their phones, 

the chip sectors of Korea, the US, Japan, and Taiwan are all going to be faced with a major crisis. 

We can already see the warning signs in the NAND memory sector. 

In 2023, the global electronics and semiconductor markets contracted, and Samsung and SK Hynix both saw NAND sales plummet by over 30%.

In this punishing environment, only YMTC saw its sales actually increase, posting modest growth of 4.3%, with revenues reaching USD 2.2 billion.

This brought its share of the global NAND market to 5.9%, up from 3.6%.

This shows us that China’s chipmakers are making some headway, and with the establishment of China’s third “Big Fund” for semiconductors

— this one valued at more than USD 50 billion — the Chinese threat to the top five global NAND companies is growing more menacing. 

The Biden-Harris administration is prioritizing advanced manufacturing and AI technology exports,

but its measures against China‘s ICT device manufacturing sectors, 

which are the most important semiconductor sales channels for Korean chipmakers, seem less stringent than those of the Trump administration. 

Given that China is a major market for advanced semiconductors, a failure to contain its chip technology could pose a substantial threat.

Regardless of the outcome of the 47th U.S. presidential election, 

it is imperative to proactively strengthen measures to counter China‘s influence in the semiconductor supply chain, particularly regarding NAND flash technology.

To this end, enhancing cooperation among Korea, the United States, and Japan on export controls for ultra-low temperature etching equipment and related materials is crucial.

These components are essential for the mass production of high-layer NAND flash (400 layers or more), a technology that will play a pivotal role in the future AI era alongside high-bandwidth memory (HBM).

The swift implementation of these measures is urgently needed to ensure their effectiveness.

That concludes my summary of some of the major issues regarding the potential impact of the 47th US presidential election on the semiconductor industry.

Thanks for watching, and I invite you to keep up to date with the latest research on the chip sector from the Korea Institute for Industrial Economics and Trade.

Visit us at http://www.kiet.re.kr/en. You can also find us on SSRN, YouTube, and Instagram. 
Have a good one!

 

 Korean batterymakers have managed to stake out a sizable share of the US market.  

But if growth in the EV sector slows even further under a Trump administration, the performance of Korean firms in the U.S. market could suffer.

Hello. My name is Kyung In Hwang.

I study the battery sector as a researcher in the System Industry Division at the Korea Institute for Industrial Economics and Trade (KIET). 

Today, I will discuss the potential impacts of the 47th U.S. presidential election on the Korean battery industry and explore how Korea might respond to these changes.

The battery industry has recently experienced a slight slowdown as the electric vehicle (EV) market enters what is known as the “chasm” — a period of stalled growth that occurs just before mass adoption.

Despite this temporary decline in growth, the battery industry is expected to maintain a positive overall trajectory in the long run, 

as it remains a key technology for the carbon-neutral and electrified future of industry.

The battery industry is one of Korea's flagship sectors, with Korean battery companies showing strong performance and holding significant market shares in both the U.S. and Europe.

However, the upcoming U.S. presidential election in November represents a major wild card variable that could shape the future development of the entire Korean battery industry, 

as Democratic candidate Kamala Harris and Republican candidate Donald Trump have diametrically opposed viewpoints on batteries and EVs in general.

Let’s begin by examining the positions of Harris. She is expected to continue the Biden administration’s eco-friendly policies and climate change initiatives. 

And few expect that, if elected, Harris would seek to amend the provisions of the Inflation Reduction Act (IRA), which has been credited with significantly boosting battery demand in the United States.

Korean batterymakers recently usurped their Japanese competitors to take the lead in the U.S. battery market.

Many analyses attribute this success to the IRA’s battery provisions, such as tax credits for eco-friendly vehicles, which have worked to Korea’s advantage.

Assuming a Harris administration keeps the IRA in its current form, Korean battery companies are likely to maintain their strong position in the U.S. market.

On the other hand, Trump is fundamentally skeptical of green energy and EVs and has criticized the IRA. 

And so a Trump victory would be more likely to pose an immediate threat to the Korean battery industry. 

Despite the EV chasm and intense competition from Chinese companies, 

Korean batterymakers have managed to stake out a sizable share of the US market. 

 But if growth in the EV sector slows even further under a Trump administration, the performance of Korean firms in the U.S. market could suffer.

Furthermore, if Trump follows through on his promise to roll back the IRA, Korean companies that have made substantial investments in the U.S.

with the expectation of government support and future profits will need to undertake an urgent and comprehensive reassessment of their strategies.

Yet, the IRA does enjoy a broad base of support, and this includes support from Republican-led regions that benefit from it. 

This makes its outright repeal unlikely. 

Nevertheless, Trump could use executive orders to minimize its effectiveness. 

How should Korean companies in the battery industry respond to a potential Harris or Trump victory?

If Harris is elected, she is expected to continue pursuing a "de-risking" policy toward China, incentivizing American firms to diversify their supply chains away from America’s main geopolitical rival. 

A Harris administration would likely continue to enforce Foreign Entities of Concern (FEOC) guidance.

In response, Korean battery companies should focus on diversifying their sources of battery minerals and materials and work towards internalizing more of the battery supply chain. 

To facilitate this, the Korean government could expand support for domestic production of critical battery inputs sensitive to IRA provisions, such as graphite.

If Trump takes office, the industry must gird for a potential slowdown in the growth of the EV market.

To help batterymakers weather a Trump storm, the Korean government could support battery manufacturers by propping up demand in other battery sectors, such as energy storage systems (ESS) and urban air mobility (UAM). 

Tax incentives and subsidies could encourage Korean battery companies to continue investing as the EV market bridges the chasm.

Regarding the IRA, both public and private stakeholders in the battery sector should quantify the economic impact of Korean investments in various U.S. regions

 and use this information as leverage in future negotiations related to the IRA.

This concludes my brief summary of the potential impacts of the 47th U.S. presidential election on the battery industry. 

We appreciate your continued interest in the Korea Institute for Industrial Economics & Trade's research on the battery industry.

Visit us at http://www.kiet.re.kr/en, or find us on SSRN, Instagram, and YouTube. Thanks!

 

 

Hello, I am Kyoung You Kim,

Director of the System Industry Division at the Korea Institute for Industrial Economics and Trade (KIET).

Today, I will provide a brief overview of the impact of the 47th U.S. presidential election on the Korean automotive industry 

and discuss how Korea could respond to either a Trump or Harris victory.

In 2023, domestic Korean automakers shipped 65% of their production to markets overseas,

with just about half of all exports bound for the U.S. Export destinations for electric vehicles (EVs) are more diverse,

and in general Korean EV sales are not as heavily dependent on the U.S. market as internal combustion engine (ICE) sales, 

but US demand for Korean EVs has been growing rapidly, with market having averaged 88% growth from 2019 to 2023.

The U.S. automobile market is crucial to Korea’s automotive industry and broader economy, 

and this means the upcoming U.S. presidential election in November, 

whatever the outcome, will have a significant impact on various aspects of our automotive industry, including exports.

Environmental regulations are the salient distinguishing feature between the platforms of Democratic candidate Kamala Harris and GOP candidate Donald Trump.

Harris is likely maintain the Inflation Reduction Act (IRA)’s subsidies for EV purchases and EV manufacturing, 

but Trump is expected to reduce or eliminate them, believing that that EVs harm the US automobile industry and even the American economy as a whole.

Weaker environmental regulations would likely retard demand growth for EVs in the US,

which would in turn have a negative impact on Korean automobile companies actively investing in EV development and production both domestically and stateside.

However, Korean automobile companies are also highly competitive in hybrid vehicles, which are expected to replace some demand for EVs. 

In this way, they should be able to shrug off some of the negative impact of weaker EV demand. 

If elected, Trump is expected to strengthen protectionist policies and apply a universal tariff on imported goods.

The Korean automobile industry recorded a trade surplus of USD 28.9 billion with the U.S. in 2023.

This means it is likely to be included on any list of countries subject to universal tariffs under the pretext of protecting the US automobile industry.

Korean automakers would jellylike experience an overall decline in exports of finished vehicles and parts.

In terms of supply chain policy, both the Harris and Trump camps are pursuing a strategy of isolating China. 

The Korean auto sector could step to to fill at least some of the vacuum left by China. 

While the Democratic Party is focusing on parts and materials for electric vehicles,

the Republican Party is expected to more broadly seek to isolate and exclude China from the global trader order in all auto parts sectors.

 If this were to come to pass, Korea should make sure its automakers are in a position to capitalize.

If Harris takes office, Korean companies will need to strengthen their presence in the U.S. EV market.

This will require strategic negotiations to ensure that the IRA subsidies favor Korean exports and products, as well as efforts to enhance the competitiveness of Korean EVs.

On the other hand, if Trump is elected, there is a real risk that he slaps even higher tariffs on imported autos.

This means Korea needs to prepare to conduct intensive trade diplomacy with the US to minimize the impacts of these duties. 

 We also need to continuing diversifying export markets for Korean cars, trucks, and buses.

Both Harris and Trump are likely to continue the preceding administrations policy of Chinese containment, particularly in the EV supply chain.

Korean companies should focus on diversifying their supply chains and enhancing domestic production capacity.

Only by doing so can they hope to become leaders in the rapidly shifting global automotive supply chain.

This concludes our discussion on the potential impacts of the 47th U.S. presidential election on the automotive industry and Korea’s response.

We appreciate your continued interest in automotive industry research by the Korea Institute for Industrial Economics & Trade.

Visit us at http://www.kiet.re.kr/en, or find us on SSRN, Instagram, and YouTube.

 

To enhance Korea’s economic and industrial competitiveness amid chronic low growth, internal reforms are crucial. 

However, it is equally important to take advantage of the shifting international political landscape.

 Hello, this is Kyung Hee Kwon from the ICT & Emerging Industry Division of the Korea Institute for Industrial Economics and Trade (KIET).

The 47th presidential election of the United States, set to be on November 5 of this year, is just two months away.

The presidential election is currently a two-way race between Democratic Party candidate (and current Vice President) Kamala Harris and GOP nominee Donald Trump. 

The race was shaken up following President Joe Biden's withdrawal, with the Democratic Party rallying behind Harris. 

Shortly after, presidential hopeful Robert F. Kennedy Jr. dropped out and declared support for Donald Trump. 

Recently, Korean government institutions, universities, and various research institutes called for a timely research report on the potential impacts of this critical election on Korean industry. 

The findings of the research I will describe in this video constitute KIET’s response to these calls. 

Let’s take a look at some of the key differences in the views and positions of Harris and Trump on major issues. 

First up, we’ll talk about the candidates’ strategies with regards to China.

Harris is expected to continue pursuing the Biden administration’s so-called “de-risking” strategy. 

Here, the focus has been on maintaining American technological superiority by restricting exports in advanced strategic sectors such as semiconductors, quantum computing, and artificial intelligence, 

while still benefiting from the importation of low-cost manufactured goods from China.

But the current administration has also engaged in some protectionist measures. 

For one, it kept the 25% duty on USD 350 billion worth of Chinese imports that was first imposed during US-China trade negotiations under Trump. 

And just this May, the Biden administration hiked tariffs on USD 18 billion worth of Chinese imports, with this round of duties focusing on electric vehicles, batteries, steel, and aluminum. 

This suggests that Harris, herself a key member of the Biden administration, may favor a strategy of strategic and targeted tariffs on China

 if she were to become President, raising or lowering duties selectively to advance the interests of key domestic industries.

This is a flexible approach, especially in comparison to her opponent. 

The Trump camp is advocating for a strategic decoupling from China. Under the International Emergency Economic Powers Act of 1977,

the Trump campaign has proposed not only a 10% universal tariff on all Chinese imports, 

but also reciprocal tariffs, a 60% tariff on Chinese goods, and the removal of most-favored-nation status. 

This tells us that Trump would seek not only to reduce trade with China but to sever ties wherever possible, including in R&D, labor, and investment. 

And this decoupling extends beyond China: major economies including Korea, Japan, and Europe would also be affected, as Trump demands balanced trade and “reciprocity” from all trading partners.

Korea is particularly worried about potential US tariffs on its automobile and steel industries.

Next, we‘ll discuss the two candidates‘ environmental views.

Harris and Trump present sharply contrasting positions on environmental policy and the green transition.

If Harris is elected, it is expected that she will continue pursuing the Green New Deal measures of the Biden administration,

which include efforts to tackle the climate crisis through investments in de-carbonization and the expansion of green industrial policies. 

A Harris victory would likely ensure that some of the core provisions of the Inflation Reduction Act (IRA) are upheld, such as its production tax credits and electric vehicle (EV) subsidies. 

This could benefit Korean battery companies, as it would allow them to continue investing in domestic facilities and help protect their future profitability.

However, stronger environmental policy raises concerns that the US could erect carbon-related non-tariff barriers, which would have a major impact on Korea’s steel and chemical industries. 

On the other hand, if Trump wins, we could see the growth of the EV market contract even more, due to his climate skepticism and his focus on supporting the fossil fuel industry.

The ultimate fate of the IRA heavily depends on the outcome of the general election on November 5.

Third, we will discuss the two candidates’ foreign policy platforms. 

The Harris camp is likely to focus on containing both China and Russia while maintaining and strengthening support for Ukraine and NATO. 

This approach reflects an internationalist stance that emphasizes cooperation and collaboration with allies and partner nations.

In contrast, Trump prioritizes aggressively containing China, but at the same time would look to reduce support for Ukraine and bring about an end to the conflict with Russia.

He would also try to get US allies to pay more for US military protection. 

This reflects a more isolationist approach compared to that of Harris and the Democrats. 

The outcome of this election is likely to have a significant impact on the future of Korean defense industry exports and Korean defense firms’ prospects for integrating into defense supply chains in the US and elsewhere. 

Finally, we’ll review some of the domestic economic proposals of the candidates, which is where we will observe the sharpest contrasts between them. 

Harris has sparked significant debate both domestically and internationally with her proposal to raise the corporate tax rate for high-income earners and corporations, 

including a 25% tax on unrealized capital gains for those with net assets of USD 100 million or more.

To address economic inequality, she has pledged not to increase taxes for individuals earning USD 400,000 or less annually,

expand tax deductions for families with newborns and for low- and middle-income households, 

and to institute policies to mitigate the financial burden of purchasing homes, paying tuition, and covering medical expenses.

Harris has also suggested implementing price controls on companies that produce and distribute essential goods to curb inflation and rising prices. 

These proposals stand in sharp opposition to those of Trump and the Republicans. 

In contrast, the Trump camp is pushing traditional Republican strategies to boost economic growth and job creation through broad tax cuts and deregulation. 

The GOP standard-bearer is pushing to extend or permanently enact the 2017 Trump tax cuts, which are set to expire in 2025.

Trump has identified high oil prices as a key driver of inflation, and arguing from a supply-side perspective,

proposes that expanding shale gas and oil production will help the US achieve energy independence and lower production costs.

The two candidates also diverge when it comes to healthcare policy.

Harris plans to expand public health insurance and lower drug prices through negotiations between pharmaceutical companies and public insurance providers, with the power granted to the government via the IRA.

Trump, on the other hand, advocates for lowering drug prices by fostering competition among domestic and international pharmaceutical companies, 

while also seeking to lower public spending on health insurance to kickstart economic growth.

Despite these differences, both parties are expected to support policies that encourage the introduction of biosimilars to reduce healthcare costs.

 This means that exports of Korea’s leading biopharmaceutical companies — which specialize in biosimilar production — are unlikely to be significantly impacted, even if Trump is elected.

In this video, I have sought to highlight some of the major differences between Harris and Trump and what kind of impacts a Harris or Trump victory could have on Korean industries. 

For a more in-depth exploration of the topic, please refer to our full report, available at our Web site. 

As the US-China strategic competition intensifies, the global division of labor is refashioning itself across the world, 

 and this transformation of the global economy will have ripple effects that reach across all industries over the next 30 years.

To enhance Korea’s economic and industrial competitiveness amid chronic low growth, internal reforms are crucial.

However, it is equally important to take advantage of the shifting international political landscape.

KIET researchers are committed to providing you with valuable insights.

We appreciate your continued support for the Korea Institute for Industrial Economics and Trade.

Visit us at www.kiet.re.kr/en, or find us on SSRN, Instagram, and YouTube.

Thanks!

 

Korean Economic and Industrial Outlook for H2 2024
*  English subtitles are added to this video.

Hello,

I’m Sung Keun PARK,

Research Fellow and Executive Director of the Economic Outlook and Analysis Division at KIET.

I’d like to discuss the current economic situation and macroeconomic outlook for the second half of 2024.

In the domestic real economy, both consumption and investment remain sluggish, 

due largely to the impact of inflation and high interest rates. 

On the other hand, exports remain robust and are driving the growth of the economy, 

particularly in the semiconductor and automotive industries.

Despite ongoing geopolitical uncertainties and few signs of imminent rate cuts, 

the global economy is expected to experience relatively modest growth,

similar to the previous year, as major countries focus on stabilizing their economies.

Assuming oil prices hold around USD 83 per barrel and a won/dollar exchange rate of KRW 1,328 to USD 1 
(up 1.5 percent from 2023),

the Korean economy is expected to grow by 2.5% in 2024.

We expect high inflation and high interest rates to limit the growth of the domestic economy. 

 with economic expansion being driven largely by continued strong exports of semiconductors, automobiles, and ships.

Here are a few charts I would like to show you.

First up, the overall economic outlook for 2024.

Like I just mentioned, the Korean economy is forecast to grow by 2.5% year-over-year (YoY) in 2024. 

In the domestic sector, continued high inflation and high interest rates will constrain growth, 

but strong exports of chips, vehicles, and ships (among other goods) should nonetheless lead to an expansion of the economy. 

Key external factors to consider include uncertainties regarding the moderation of global inflation and the timing of interest rate cuts by major countries, 

in addition to geopolitical tensions and wars.

 There is also the policy uncertainty surrounding the US presidential election.

Next up is our outlook on private consumption.

Private consumption is expected to grow modestly. 

This is due to persistent high inflation and high interest rates that have weakened real purchasing power.

However, we anticipate that consumption should pick up in the latter half of the year as prices stabilize and export performance materializes as higher incomes. 

Next up is investment.

Facilities investment should bounce back somewhat as the semiconductor industry recovers. 

But high interest rates have made financing capital-intensive projects more expensive and are thus likely to cap the potential of the recovery. 

Significant domestic and international uncertainties are also poised to influence investment decisions at home. 

Construction investment, on the other hand, is set to fall this year, despite lower materials costs. 

This is due to high interest rates, a slump in the real estate market, and a decrease in new permits and groundbreakings.

Finally, we’ll discuss the outlook for trade.

2024 should see export growth of 8.3% YoY, driven by continued strong performance in the semiconductor and automotive industries. 

Imports should tick up by 1.4% annually, buoyed by growth in intermediate goods imports following the improvement in export conditions in the second half of the year.

As exports are set to outpace imports, Korea is poised to net an annual trade surplus of USD 33.5 billion in 2024. 

This would be the first positive balance of payments recorded in three years.

Hello,

I’m Jae Yoon LEE, 

Research Fellow and Director of the Materials & Sustainability Division at the KIET Center for Growth Engine Industries.

I’ll be discussing the outlook for Korea’s thirteen flagship industries in the second half of 2024.

In the second half of 2024, despite macroeconomic and geopolitical uncertainties and an intensification of protectionist sentiment worldwide, 

Korea’s 13 flagship industries are expected to continue seeing high export growth driven by strong global IT demand and the recovery of domestic and international investments,

with anticipated improvements in domestic demand and production.

Overall, we expect robust growth in several IT subsectors, including semiconductors, information and communication devices, and biotech, as well as in the shipbuilding industry.

The automotive industry should continue flying high, while growth in other major segments such as petrochemicals and steel looks to remain flat.

The slope of the decline in the battery industry (for which indicators show signs of contraction) should taper off in the second half of the year.

Now, let's delve into the category-specific outlook of the thirteen flagship industries through detailed graphs.

First, let's explore the export outlook for the 13 flagship industries in the second half of 2024.

Overall, exports in Korea’s 13 flagship industries grew by 11.8% in the first half of 2024, 

and we expect exports to maintain this trajectory in the second half of the year, with a projected growth rate of 9.3%. 

This sustained growth is driven by robust global IT demand and improving economic conditions and export prices in key export markets. 

Overall, annual exports for 2024 are projected to increase by 10.5% YoY.

Exports in the machinery industries are expected to increase by 3.8% YoY, driven by steady demand growth in major export markets such as the United States.

The automotive sector in particular is expected to achieve its best-ever export performance, with YoY export growth of 3.3%. 

The shipbuilding industry is expected to maintain its growth momentum in the second half (11.5%), 

ultimately contributing to an annual export growth rate of 21.5%, marking a continuation of last year’s strong performance. 

With higher export unit prices, most materials industries, including steel (3.5%) and petrochemicals (4.8%), 

are expected to post good export performance and either transition to a growth trend or build upon existing momentum in the second half of the year. 

The sole exception to this is the petroleum refining sector, in which exports are set to contract modestly (-0.9%).

Exports in most sectors of the emerging IT industries, including information communication devices (16.6%), 

 semiconductors (26.3%), and biotech (24.9%), are expected to continue their upward trajectory, 

buoyed by the expansion of global demand and the impact of rising unit prices for IT products. 

We anticipate the sector to achieve YoY growth of 19.6% in the second half of 2024, with overall growth of 23.7% on the year.

Next, we will cover the domestic forecasts for the thirteen flagship industries.

In the second half of 2024, we expect an improvement in the domestic market for the materials and IT industries, 

driven by a recovery of facilities investment, an expansion of exports in key industries, and the emergence of new demand. 

However, we project that the domestic automotive and battery markets will continue to shrink in the second half of the year.

In the domestic machinery sector, demand for investments in smart and eco-friendly facilities should mitigate an expected decline in general machinery (-0.3%).

However we do anticipate that the domestic automotive industry will continue along its downward trajectory in the second half of the year (-4.8%), due to worsening purchasing conditions.

We expect modest domestic growth in the materials industry, with growth in the steel (1.7%), petrochemicals (0.3%), and textiles (1.2%) sectors driven by a recovery in forward industries. 

However, environmental regulations and other factors mean that the oil refining sector is likely to contract (-0.4%) in the second half of this year.

In the IT sector, we expect domestic growth for information and communication devices (8.4%) and semiconductors (10.3%) to recover, driven by demand for new devices and strong export performance.

In addition, growth in the supply of new pharmaceuticals will continue to drive domestic growth in the biotech sector (6.1%) in the second half of the year.

Finally, despite an ongoing contraction, the decline in domestic growth for batteries (-3.1%) should flatten out somewhat in the latter half of the year.

Next up: production outlooks for the thirteen flagship industries.

In the second half of 2024, we expect a favorable production trend in the IT sector and a moderate increase in production in the materials industry,

due to higher exports and a mild domestic recovery. 

We also anticipate significant growth in the shipbuilding industry as supply issues improve.

 Regarding the machinery industries, a slowdown in the growth of automobile production (1.4%) is expected due to weak domestic demand and the base effect.

However, the decline in production for general machinery (-0.1%) is expected to significantly ease due to improvements in domestic demand. 

Moreover, production in the shipbuilding industry is poised to jump (24.7%), enabled by improvements in the skills of foreign workers.

Regarding the materials sector, we expect an expansion of production growth in the petrochemicals (2.4%) sector due to new investments and increased exports, 

 while growth in the steel (0.7%) and oil refining (0.2%) sectors should remain flat.

In contrast, despite a slight increase in production in the second half of the year (1.1%), overall production in the textiles industry should fall as domestic production infrastructure deteriorates. 

In the emerging IT industries, we expect robust production growth in the information and communication devices (15.4%), 

semiconductor (24.1%), and biotech (20.0%) sectors as demand recovers domestically and internationally.

 In addition, production in the batteries industry (1.8%) is poised for an upswing in the second half of the year, as new investments come online and the demand contraction wanes. 

Finally, let’s talk about imports.

In the second half of 2024, imports in the top 13 flagship industries are expected to increase by 7.9% YoY, contributing to overall annual growth of 3.0%.

This is influenced by the expansion of imports in the semiconductor, automobile, and basic materials sectors,

 which is a result of increased exports, rising unit prices due to currency fluctuations, and the entry of low-cost imported materials.

In the machinery sector, overall imports look to remain similar to 2023 levels,

but we expect a significant increase in imports of products related to shipbuilding and automobiles due to rising import unit prices and expanded import of components. 

Overall, the annual increase should come to 7.6% YoY.

Imports in the materials industry are anticipated to increase by 5.9% in the second half of the year, contributing to overall YoY growth of 2.9%. 

This growth is being fueled by the spread of low-cost general-purpose materials and the aggressive market expansion of Chinese direct purchasing firms.

Imports in the emerging IT industries are expected to increase by 9.1% YoY in the second half of the year due to the expansion of exports and domestic demand in the domestic IT industry, 

as well as the entry of Chinese products into the domestic market. 

However, imports of batteries and biotech health products are set to fall owing to unit price decreases and worsening import conditions both domestically and internationally.


[REPORT]
https://www.kiet.re.kr/trends/ecolookView?ecolook_no=48&skey=&sval=

"The stew is simmering, but we’re all out of tofu...  

Can't just leave the kid home alone to get some. 

And my husband insists it's not real doenjang jjigae without it.."

"Great job everyone! Ice cream on me! 

Now who can go and grab some for the team?"

"Out of toothpaste, and gotta run... What to do?“

These situations used to mean scrambling or going without.

But now, with quick commerce, a few taps on your phone take care of everything.

Delivery options used to be limited to pizza, fried chicken, and Chinese take-out. 

But this is no longer the case, as the industry has grown to include groceries, desserts, and even toothpaste, all delivered in a flash.

Quick commerce - think of it as online shopping on fast forward. 

It combines "quick" style courier delivery with the convenience of buying products online.

Imagine getting your groceries delivered in the time it takes for a walk to the store;

quick commerce typically delivers orders within 30 minutes to an hour, and its popularity is booming worldwide .

In the past, similar services delivered products from nearby stores. 

Quick commerce takes a different approach.

Orders placed through a mobile app are fulfilled from strategically located micro-fulfillment centers: essentially, mini warehouses closer to consumers.

Quick commerce focuses on everyday essentials in smaller quantities, 

and thus may overlap in terms of both product selection and proximity to consumers with old-fashioned local stores

peppered on the alleys and streets that criss-cross residential neighborhoods. 

For this reason, there are concerns that quick commerce might squeeze out these local businesses.

To investigate this, the Korea Institute for Industrial Economics and Trade studied the impact of quick commerce on small-scale local stores. 

Researchers analyzed sales data from stores located in one specific district for three months following the opening of a micro-fulfillment center in the same area. 

Businesses in the district as a whole did not experience a significant sales decline, but some convenience stores and SSMs did.

The quick commerce market is surging, both here and abroad. 

We expect continued domestic growth as existing players invest more and new companies jump in. 

However, intense competition and high operating costs raise questions about long-term sustainability.

At its core, quick commerce is a novel distribution model that caters to our desire for instant gratification by drastically speeding up delivery. 

Looking ahead, we need government support focused on fostering a competitive environment for short-distance delivery businesses

- rather than restrictive regulations - 
while also closely monitoring market trends.

 

AI scientists? Robot consultants?  Is AI coming for your job? 


On February 15th, OpenAI introduced Sora,

an AI that turns text descriptions into videos.

Imagine crafting intricate scenes with just a few words. 

Sora is a video production AI, 

and can do just that - from rendering the texture of dog fur  to portraying a woman walking at night. 

It can even depict reflections of passengers on a moving train!

The detail and realism of Sora's creations are truly mind-blowing.

It's a leap forward that surpasses even the initial shock of ChatGPT, released two years ago. 

Witnessing Sora's capabilities reinforces just how rapidly AI is evolving.

But AI's rise isn't without concerns. 

As it gets smarter, there are fears that it will make jobs disappear. 

A study by the Korea Institute for Industrial Economics and Trade (KIET) found 

hat AI could displace a staggering 3.27 million jobs in Korea.

Notably, KIET found that job losses would not be limited to sectors directly related to AI,

like ICT or professional, scientific, and technical services. 

Even the construction and manufacturing sectors, typically bastions of employment, were to be significantly impacted.

Right now, professional jobs seem most vulnerable to AI automation. 

The study found that 60% of positions at risk are currently filled by highly educated professionals, such as engineers and IT specialists.

While AI replacing jobs is a valid concern,

it's important to remember we're still in the early stages of adoption. 

Currently, the demand for workers to implement AI is actually growing faster than the number of jobs AI replaces.

In fact, only about 4% of Korean companies currently use AI. 

Yet, industries heavily involved in AI research and development are in the midst of a hiring spree of highly educated engineers, 

especially those with master's and doctoral degrees. 

This suggests AI is already creating new job opportunities, especially for those with advanced qualifications.

The era of AI is upon us.

With its undeniable impact on employment, 

we need to forecast these changes and develop strategies to navigate the future landscape of the labor market So, 

Dr. Min, how can we best prepare for these challenges?

In the near future, securing skilled professionals to implement AI is crucial.

Developing AI requires a highly trained workforce. 

We need to consider revamping our tertiary education programs

or improving visa systems to develop and attract workers with the right skills. 

Over the long run, we need strategies to deal with the problem of job displacement due to AI.

We must forecast future in-demand skills and create a human capital development plan to equip our workforce for those jobs.

 

H2 boom: Is hydrogen the future of energy?
A KIET expert weighs in on the growing green H2 market(Feat. Sul-Ki Lee, Ph.D)

 English subtitles are added to this video.

0:00:31 The hydrogen market in 2024: Major trends and issues 
0:02:12 Policy landscape: Korea and beyond
0:02:57 Opportunities and threats: A look ahead (1)
0:03:43 Opportunities and threats: A look ahead (2)


We anticipate the emergence of a robust global market for clean hydrogen,

driven by supply-side policies implemented in leading global economies, 

including the United States, Europe, and even South Korea.

One major opportunity is the declining cost of renewable power. 

Hello, this is Sul-Ki LEE. 

I am an economist studying energy, renewables, and environmental economics

 for the ICT & Emerging Industry Division of the Korean Institute for Industrial Economics and Trade. 

Lately, we are seeing more and more interest in hydrogen as a potential solution

 for reducing greenhouse gas (GHG) emissions in sectors where electrification is not feasible. 

Today, I would like to go over some of the key issues and recent topics in the hydrogen industry.

1. The hydrogen market in 2024: Major trends and issues 

2024 marks a pivotal year for hydrogen.

The first big issue to discuss is clean hydrogen. 

We anticipate the emergence of a robust global market for clean hydrogen, 

driven by supply-side policies implemented in leading global economies, including the United States, Europe, and even South Korea.

Clean hydrogen refers to hydrogen produced in a way that generates minimal GHG emissions. 

Electrolysis that utilizes renewable energy sources to separate water into its constituent elements is one such example. 

Clean hydrogen may prove a crucial tool for combating climate change and achieving environmental sustainability.

While the expansion of the clean hydrogen market is poised to stoke demand for green hydrogen, 

which is hydrogen produced using renewable energy, the cost of producing this type of hydrogen remains high. In the immediate future, 

this necessitates the continued use of alternative options such as “blue” hydrogen, which is hydrogen produced from natural gas using carbon capture, as well as nuclear hydrogen.

The second major issue is this. 

As the clean hydrogen supply chain expands, technical and regulatory challenges surrounding water electrolysis will become increasingly prominent. 

These include ensuring long-term stability and durability of large-scale electrolysis projects and enabling the mass production of high-capacity systems. 

Establishing robust standards and certification methods is crucial to legitimize clean hydrogen production.

2. Policy landscape: Korea and beyond

Let’s move on now, and take a close look at hydrogen policies around the world. 

I’d like to focus specifically on clean hydrogen certification. 

In December 2023, Korea established a framework for its clean hydrogen certification system 

during the sixth session of the government’s main deliberative body for hydrogen-related issues, the Hydrogen Economy Committee.

This paved the way for the launch of a clean hydrogen power generation bidding market this year.  

The US federal government also announced in December of 2023 a major tax credit for green hydrogen production under the Inflation Reduction Act. 

Similarly, Europe, the United Kingdom, and Japan are also formulating clean hydrogen standards and promulgating support programs tailored to their specific circumstances.

3. Opportunities and threats: A look ahead

Now I will explore some of the major opportunities and threats facing the hydrogen industry today.

One major opportunity is the declining cost of renewable power. 

According to Bloomberg (H2 2022), offshore wind power is now cost-competitive with fossil fuels, 

with a per MWh unit price USD 3 lower than coal and USD 18 lower than gas, and solar power is even cheaper. 

Unit prices of renewable energy are falling, laying the foundation for the widespread adoption of green hydrogen in the future.

The high price of hydrogen has been the primary culprit hindering its supply, and so lower hydrogen prices are very encouraging.

Another major opportunity is the flourishing environment for green hydrogen collaboration. 

Large sources of demand for green hydrogen, including Korea, Japan, and Europe, are forging partnerships with Latin American countries, 

Australia, and Middle Eastern nations, which are rich in renewable energy resources, and launching large-scale production initiatives. 

European and Japanese companies possess advanced water electrolysis technologies and are aggressively courting international cooperation 

and conducting demonstration projects to leverage resources made available through these new partnerships.

Yet there are significant threats facing the industry despite the sanguine outlook overall.

On the supply side, operational disruptions and capacity shortfalls in production and infrastructure development are major risks. 

On the demand side, many have voiced concerns over the safety of hydrogen. These concerns must be addressed, lest they hinder the continued adoption of hydrogen.

Thank you for exploring the state of the hydrogen industry with me today. 

KIET will continue to monitor and analyze industry trends to provide valuable insights for all stakeholders.

Thank you!