The global trade order is in flux after the U.S. Supreme Court ruled against President Donald Trump's reciprocal tariff measures. Immediately following the ruling, Trump expressed strong dissatisfaction and announced plans to raise global tariffs from 10% to 15% under Section 122 of U.S. trade law—signaling his intent to maintain tariff-based pressure despite the judicial decision.
The United States is attempting to lure manufacturing from allied nations including South Korea and Japan through tariff pressure and investment incentives. However, analysts say structural limitations make it nearly impossible to catch up with China even if some relocation occurs.
"Factory Relocations from Korea, Japan, Germany Won't Reshape Global Landscape"
In an interview with Seoul Economic Daily on June 23, Ha-Joon Chang, professor of economics at the University of London, stated: "Given the scale and structure of U.S. manufacturing, even if some Korean, Japanese, and German companies relocate factories to the United States, the global manufacturing landscape won't change."
"The U.S. accounts for roughly 16-17% of global manufacturing output, while China represents about 30%," Chang explained. "China's share is nearly double that of the United States. Japan accounts for approximately 5.6%, Germany 4.9%, and South Korea 2.7%."
"The U.S. is so large that even if Korea, Japan, and Germany each moved 20% of their manufacturing there, America's global share would only rise from 17% to about 20%—not enough to overtake China or fundamentally alter the equation," he said. "Realistically, it's not even feasible for these countries to relocate manufacturing to that extent."
These nations must maintain domestic jobs and industrial ecosystems, making large-scale transfers of core manufacturing capabilities abroad difficult. This explains why the manufacturing reshoring the U.S. hopes for will inevitably be limited.
"Tariffs Are Trump's Magic Wand—Korea Must Buy Time Until U.S. Midterms"
Trump has used tariffs to pressure foreign companies into investing in the United States. "Tariffs are like a magic wand for President Trump," Chang said. "The notion that tariffs can solve everything is closer to fantasy."
Chang warned that it would be dangerous for the Korean government to rush legislation related to a U.S.-Korea trade agreement or make structural concessions under current circumstances.
He first questioned the effectiveness of Section 122, which Trump invoked after the ruling. "Section 122 of U.S. trade law can only be applied for a maximum of 150 days, and extension requires congressional ratification," Chang noted. "With Republicans holding only a four-seat majority in Congress, ratification becomes difficult if just a few members change their position." He added that since this measure applies uniformly to all countries, there is no need to be overly fearful.
The key point Chang repeatedly emphasized was "time." He said: "Korea needs to buy time at least until the U.S. midterm elections. Tariff authority in the United States fundamentally resides with Congress, and when congressional composition changes, policies can shift dramatically."
Chang also drew a firm line against U.S. demands for Korea to enact special legislation related to investment in America. "The U.S. Supreme Court has issued its ruling, yet the United States itself hasn't properly enacted relevant legislation," he said. "Why should Korea be the first to create such laws?" He added: "Major trade matters like free trade agreements require National Assembly ratification in Korea as well. If the United States demands we enact related legislation, we should likewise demand legal grounds from them."
"No Need to Compare Speed With Japan—Hasty Legislation Is Dangerous"
Regarding concerns that Korea might face pressure following Japan's relatively swift decisions on U.S. investment, Chang was emphatic: "There's no need to compare speed." He noted: "Each country has different industrial structures, relationships with the U.S., and security environments. Japan announced its U.S. investment projects ahead of us and is preparing related legislation—if we rush, we'll actually end up constrained."
"We can say we'll cooperate to a certain extent this year, but codifying that into law is an entirely different matter," he warned. "Even if there are items worth investing in now, in four or five years when those opportunities are exhausted, we could find ourselves legally bound to make forced investments."
Chang analyzed the background of the Trump administration's tariff policy: "While there's a revenue-raising purpose, it's essentially a strategy to pressure foreign companies on behalf of American companies." He explained: "Aside from artificial intelligence and some semiconductors, U.S. companies have very limited investment capacity and production capability. That's why they're pressuring Korea, Japan, and Germany to attract investment."
"Trump Tariffs Are Self-Harm—Consumers Bear the Burden"
Chang offered negative assessments of the tariff policy's economic effects. "In America's current situation, tariffs are tantamount to self-harm," he said. "When you impose tariffs on every country and every product, consumers end up getting hit from all directions."
He also analyzed that the effect on reducing the trade deficit would be limited. "Looking at recent trade deficit figures, they've actually grown," he noted. "The fiscal deficit may have shrunk somewhat, but once tariff refunds occur following the unconstitutionality ruling, the fiscal burden will increase again."
Chang diagnosed the broader U.S. economy: "Aside from AI, there are virtually no thriving industries." He also warned of a potential bubble in AI. "New technologies attract attention when they emerge, but bubbles often grow and eventually burst," he said. "If the AI bubble bursts in a year, interest rate policy could change abruptly."
Regarding Korea's economy, he said: "Aside from semiconductors and automobiles, exports aren't growing well. If the U.S. bubble bursts, Korea will take a direct hit, so preemptive measures like establishing funds are needed for the semiconductor industry."
For Korea's future industrial strategy, he identified renewable energy, AI, semiconductor competitiveness enhancement, and nurturing mid-sized manufacturers. "In Germany and Switzerland, mid-sized companies in materials, parts, and equipment are strong," he said. "Korea needs to cultivate mid-sized companies with such technology and capabilities."
"Korea Has Sufficient Negotiation Cards—Must Not Be Led Around"
Chang emphasized that Korea has clear cards to play in negotiations with the United States. "Korea can build about 800 ships per year, while the United States can only manage about 10," he said. "Even if we build shipyards in America, we should be able to ask whether the U.S. can actually operate them properly." Citing the arrest of Korean technicians in Georgia, he added: "The United States needs Korean technology, so we must leverage that well."
Chang also noted upcoming political shifts. "In the U.S. midterm elections, Democrats have a high probability of winning the House and could also take a majority in the Senate," he said. "If that happens, Trump's hands will be significantly tied."
"Now is not the time for Korea to step forward and lower its posture—it's time to maintain principles and watch the situation unfold," he concluded. "The most rational strategy is not to rush, to minimize commitments, and to keep options open."