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Macroeconomics Report - Impact Of US Trade Policies: Warning Point For KORUS FTA’s Negotiations

At the end of 2016, the United States elected Donald Trump, a non-traditional leader with  a tougher style on trading issues than his predecessor, Barack Obama. It has since been reflected in the fact that the US withdrew from the Trans-Pacific Trade Partnership (TPP), renegotiations of  NAFTA and KORUS, as well as the implementation of tariffs on imported goods at the beginning of 2018. All of this creates  potential “trade wars” between the US and its trading partners.

In this report, we focus on the lessons learned from the renegotiation of the US – South Korea Free Trade Agreement (KORUS FTA) which is seen as a warning point for Vietnam. The country ranks 5th in the list of nations having the largest trade surplus with the US.

There is no doubt that Vietnam is part of a number of countries that benefit from the openness of the US market. South Korean companies play an important role in connecting Vietnam to the rest of the world. South Korean companies have been very large investors in Vietnam. Giants like LG and Samsung have built significant export bases in Vietnam.

Any changes in the KORUS FTA as well as the direction of US trade policies is likely to affect Vietnam in the mid and long term. The US and South Korea are the biggest customers and suppliers of goods to Vietnam.