Is Trump's tariff policy likely to ease? Aftermath of moderate conservative Treasury Secretary 'Bescent'

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: November 25, 2024 (Monday)
■ Talk: Min Jeong-hoon, professor of the American Research Department at the National Diplomatic Institute

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): I am telling you about the second Trump period every day. This is because the second Trump period will have a huge impact on the global economy. I also have a lot of anxiety. So, a lot of attention was paid to who would be in charge of economic policy in the administration. Trump's choice was Scott Bessent. It might be an unfamiliar name. Let's talk in detail about what kind of person this person is, why they nominated this person, and why the market is saying that it's a relief. I'll call Min Jeong-hoon, a professor of American Research at the National Diplomatic Institute. Is the professor out?

◇ Min Jeong-hoon, Professor of American Research at the National Diplomatic Institute (hereinafter referred to as Min Jeong-hoon): Yes, hello.

◆ Cho Tae-hyun: I think the appointment of the finance minister has been much delayed than expected. How important is the position of finance minister?

◇ Min Jeong-hoon: So the finance minister is the minister of strategy and finance for us. That's why it's the best economic policy department in the United States. Because it is a ministry in charge of economic policy, it has a huge responsibility. Specifically, they have enormous authority because they deal with taxes, national debt, financial regulations, sanctions, economic diplomacy, etc. with the Ministry of Commerce. In particular, Trump is said to play a role in reducing the U.S. trade deficit through tariffs, such as imposing universal standard tariffs using tariffs or enacting the Trump Mutual Trade Act to claim tariff rates with fair tariffs around the world. In addition, it is said that the U.S. will be a manufacturing hub by selectively decoupling with China in the high-tech sector. So because this economic and trade policy is at the core, the focus was on who will be the finance minister and commerce secretary, so as you said, the founder of the Bessent hedge fund Key Square Group has now been selected. There was a lot of discussion in the process and I think there was opposition. That's why I'm thinking that it took a long time.

◆ Cho Tae-hyun: They are the kind of people who can be seen as key positions to implement Trump's pledge with enormous authority, and Professor Bessent said a little while ago, but Elon Musk, who is now the most powerful figure in the Trump administration, also openly opposed it, right? How do you rate this person?

◇ Min Jeong-hoon: So from what's being said in the United States, he actively helped President-elect Trump and served as an economic advisor this time, but since he has a moderate and conservative tendency, I think he can make some adjustments in this area where he shakes the global trade market by using tariffs a little more than President-elect Trump. However, when Trump nominated this person, he said that he would support some kind of policy. So I think he basically showed loyalty to President-elect Trump because he said he would support his policy in increasing U.S. competitiveness, preventing unfair trade imbalances and dominating the energy market. However, since the minister has such authority when realizing this tariff, I hope that a more realistic tariff policy can be reached through coordination with President Trump in this area. But anyway, the final decision is made by the president, so we have to wait and see how it will come out.

◆ Cho Tae-hyun: I think some foreign media said it was an ironic appointment. Anyway, Trump's pledge can be seen as a very opposing point in this situation where national debt has to be reduced. There's also talk of fiscal efficiency that Bessent wants, so can these things be possible?

◇ Min Jeong-hoon: So how do you use these tariffs? So if you use these tariffs to raise the price of imported goods, as economists say, this eventually leads to consumers buying things at higher prices in the U.S. domestic market. So, of course, inflation is going up, so how can it control inflation in the U.S. and reduce the national debt? Of course, Trump argues that tariffs are used to reduce national debt. Because you're going to have price competitiveness by imposing tariffs, but you're going to impose a burden on foreign companies, not on American companies or domestic companies. So the U.S. is going to be domestically price competitive and this will allow us to reduce our debt now. And if tariffs are imposed, the U.S. government can secure some tax sources, so it will help the burden economically in that respect. We're talking about this, but this is actually a difficult part for economists to accept. So it doesn't seem easy how this Treasury Secretary, Bessent, can coordinate this in that regard.

◆ Cho Tae-hyun: Let's wait and see if the combination with moderate conservative Bessent and Trump can cruise. I think he talks about Trump's second term almost every day. In fact, we should not overlook the fact that the president of the United States is not Trump yet, but Joe Biden. Recently, I heard that the Biden administration's speed of work is very fast, what is the situation?

◇ Min Jeong-hoon: So the most mentioned thing is the Russia-Ukraine war, so now they have long-range missiles and provide anti-personnel mines.

◆ Cho Tae-hyun: He also allowed Russia to strike,

◇ Min Jeong-hun: There's something like that. And now it's the chip method that's especially interested in us. In the case of the Semiconductor Support Act, this was passed in 2022, and now $39 billion has been allocated to total companies, but about $30 billion has not been paid yet. However, if the second Trump administration comes in, Trump has been very negative about providing large subsidies under the Chips Act and the Inflation Act, so there are considerable doubts about whether the second Trump administration will properly provide such subsidies and companies are very anxious. So, in that sense, the U.S. government is working very hard on the weekend to speed up the pace before the end of this administration and to provide 30 billion dollars in subsidies. Since it shows this situation, I think it shows that the results of this U.S. presidential election show such a significant policy impact.

◆ Cho Tae-hyun: I know. But first of all, the Chips Act itself was signed for the first time in 2022, so it's been a little over two years since it came into force. So far, we've only paid $9 billion out of $39 billion. Can the Biden administration finish this with only 60 days left?

◇ Min Jeong-hoon: I think we have to wait and see. So, companies will want to get subsidies quickly, but they will want to conclude the negotiations in a way that is as advantageous to the company as possible through detailed negotiations. It remains to be seen whether it can be completed in 60 days. However, as I said from the perspective of companies, if the second Trump administration comes in, the uncertainty will be much greater, so we are thinking that they will deal with it as quickly as possible to finalize negotiations with the Biden administration.

◆ Cho Tae-hyun: Even if it's a little sloppy, I think it's a situation where we have to do it quickly. But if the U.S. government pays for it, can't you just throw it up again just because the Trump administration has entered?

◇ Min Jeong-hoon: That's right. Now that the law has passed, it is a situation where it is paid. Therefore, if it has already been decided that it will be allocated and paid, it will be difficult for the new administration to reverse this decision. So, any subsidy from then on is possible in this area, whether it's using the authority of the administration to reduce the scope or reduce the scale. However, if the next administration really shows its determination on that part when it comes to being allocated and paid, it can delay this. If you delay it, it's a concern because it could hurt companies' financial operations considerably, so I think we should work with our partners and political actors in the United States to make sure that they're paid in time.

◆ Cho Tae-hyun: In a way, I think we're in a situation where we have to create a situation like a fall-out in professional terms. So far, we've talked about the semiconductor law and the chip law, and this is not the only thing that says that it will be more difficult if the second Trump is launched. Inflation Reduction Act IRA This part can also be controversial. In particular, the aforementioned Bessent said a lot of very negative things about this IRA. That's why the Biden administration wants to expedite the process of green loan assistance to companies. This is what the current situation is about.

◇ Min Jeong-hoon: Eco-friendly loan support is a program that provides loans to companies that are promoting large-scale clean energy projects. It is worth $37 billion for a total of 29 cases. But among them, 12 cases of $12 billion have been completed, and the remaining 17 cases are in progress. There's a lot of uncertainty about this part, too. The administration is almost finished, and most of the projects will have to be discussed with the next administration, but we will have to see how effective it will be in this area. Even if we discuss the remaining 17 cases or new parts, how uncomfortable will it be when the next administration comes in? In this regard, companies have no choice but to value what kind of relationship they have with the political field, but I think they are in a very difficult situation in this regard.

◆ Cho Tae-hyun: There is also an expansion of support for Ukraine as the professor mentioned earlier. There are also parts that speed up the IRA and the Chips Act, but the problem is that in Korea, when the regime is changed and there is a transition committee, if the current regime speeds up a policy, the new regime to replace it is often very uncomfortable. Is there any response from Trump's transition team regarding this?

◇ Min Jeong-hoon: I'm very uncomfortable with that, but anyway, the authority so far is in the Biden administration, so I'm bubbling up. I'm expressing my discomfort because I have to respect the authority of the Biden administration, but it's difficult to put it into any action. Since we are well aware of such a situation, the Biden administration needs to complete its policy achievements and leave a legacy of that, so there is a part where we can take back the presidency in the next presidential election. So, it's doing what they're doing, and it's uncomfortable for the next Republican administration, but they're trying to raise their voices by respecting that first.

◆ Cho Tae-hyun: Okay. It would be fun to know that there is such a subtle war of nerves. There is another area where the Biden administration is on a last-minute offensive. It's on the side of big tech regulation. The Biden administration has been focusing a lot on this side. There is talk that the Justice Department is asking Google to sell Chrome, what is this about?

◇ Min Jeong-hoon: That's why I filed a lawsuit. Last August, the Ministry of Justice and Google filed a lawsuit, and the court ruled. So Google monopolized the search market. I filed a lawsuit with the Ministry of Justice over this part, and the Ministry of Justice won in the end. The result was in the government's favor, and this part came as a huge shock in the big tech sector. The government will intervene directly to prevent any monopoly. It's a direct reinforcement of certain regulations on American companies with an anti-trust stance. So I think the fact that CEOs of big tech companies and some big companies lean toward Trump in this presidential election is this part of resistance against the Biden administration's anti-trust regulations. However, from the Ministry of Justice's point of view, they are determined to demand that they will forcibly sell Chrome, but that's what the court has to accept again, and the potential of Chrome is quite large, which is like giving up your main business, and Google won't be easy. And when the second Trump administration comes in, the second Trump administration is holding on to easing anti-trust regulations on this part, so I think Google will wait and see because the policy stance and voice may change. It will also be important to see what kind of voice President Trump speaks about this, and I think it will have a significant impact on setting policy directions, so we will have to wait and see.

◆ Cho Tae-hyun: Okay. But if you look at a slightly gossipy story here, the joys and sorrows of big tech companies can be very clearly divided as they change from Biden to the Trump administration. Isn't this the prospect? How do you see the professor?

◇ Min Jeong-hoon: That's right. It's because of President Trump's personal tendency. He's a person who likes and dislikes himself very much. So, for example, about someone like Zuckerberg, because the relationship is not very good, and because there was such a bad relationship in the past, there were some harsh comments about this part, so I warned him that he would spend the rest of his life in prison. And in the case of Apple CEO Tim Cook, the possibility of a Trump candidate winning the election has increased, so he changed his attitude and showed a very friendly appearance, and I think he sacrificed himself a lot for the company. However, this personal tendency of candidate Trump will be reflected in the policy, and in the second period, there will be only yes-men around and loyalists, so President Trump's intention will be reflected a lot. So, I think that the business community is responding quickly to that, so I think that some companies will be affected to some extent by the personal likes and dislikes I mentioned.

◆ Cho Tae-hyun: You said that the second period of the period when personal feelings affect the operation and policy of the state was composed of loyalist cabinet members. How do you think the professor was assigned to the right place so that he could demonstrate his loyalist cabinet work capabilities?

◇ Min Jeong-hoon: Looking at the second Trump nomination, we are interested in foreign policy, so if you look at it, it is said that it is related to Fox News, who is a hardliner on loyalty, but if you look at most people, I think there is a work connection. However, for example, in the case of a Fox News host like Pete Hegseth, who was appointed as Secretary of Defense, there is a big question mark on how much it has to do with national defense. He is a person who has a very personal controversy, so there is considerable controversy in the United States about whether such appointments are appropriate. That's why I think there are some people who can be quite controversial in the Senate confirmation process in the future. Nevertheless, anyway, since he was nominated based on his personal friendship with President-elect Trump, there are some limitations in his work expertise and connection in this regard. There is a possibility that more professional personnel will come in as that part is now filtered out during the confirmation process. So I think you should watch, but anyway, I can tell you that the appointment of Trump's second term is more about loyalty than work connection.

◆ Cho Tae-hyun: I think the country is getting a little weird. Recalling once again that personnel appointments are all things, we have looked into the situation in the United States with Min Jeong-hoon, a professor of the American Research Department at the National Diplomatic Institute. Thank you for talking today.

◇ Min Jeong-hoon: Yes, thank you.