The U.S. midterm elections saw the Democratic Party secure majorities in both chambers of Congress. However, experts predict that the Donald Trump administration's tough trade policies, including high tariffs and pressure on U.S. investments, are likely to persist. Despite potentially increased congressional oversight, analysts suggest that significant shifts in trade policy are unlikely. They advise domestic companies to bolster their risk management strategies regarding tariffs and economic security regulations.

On Thursday, the Korea International Trade Association (KITA) hosted a seminar in Seoul titled, U.S. Midterm Election Results and the Outlook for Korea-U.S. Trade Relations, in partnership with law firm Kim & Chang. Following the November 3 midterms, the Democratic Party's control of both the House and Senate is expected to create a divided government for the remainder of the Trump administration's term.

In his opening remarks, KITA Executive Vice President Jang Seok-min highlighted the growing importance of U.S. policy changes on Korean businesses, as the U.S. has become a crucial production and investment hub. He stressed the need for companies to assess the implications of the election results on U.S. trade policy and to reevaluate their business strategies accordingly.

The seminar was structured into two sessions: U.S. Midterm Election Results and the Global Trade Order and Korea-U.S. Trade Issues and Challenges. During the first session, Professor Ha Sang-eung from Sogang University predicted that the Trump administration would likely maintain its current policy trajectory, continuing to bypass Congress and risk conflicts with the judiciary.

Professor Heo Yoon, also from Sogang University, noted that even if budget-related conflicts between Congress and the administration intensify, the Trump administration's trade pressures are expected to continue. He projected increased investment pressure on U.S. security-dependent countries like South Korea, Japan, and Taiwan.

Lee Tae-ho, a senior advisor at Kim & Chang, observed that the Trump administration's tariff policies have maintained their core structure despite changes in legal grounds. He anticipates that high tariffs and the bilateral agreement-focused Turnberry system will persist, even with heightened congressional oversight in the next session.

The second session delved into specific Korea-U.S. trade issues, including compliance with investment agreements, tariff measures, and economic security regulations.

Jang Sang-sik, head of KITA's International Trade Research Institute, cautioned that prolonged conflicts between Congress and the administration in a divided government could impact administrative procedures related to U.S. investments. He advised vigilance in ensuring that safeguards like payment caps and umbrella-type profit-sharing mechanisms are functioning effectively.

Korea University Professor Jo Soo-jung predicted continued use of tariff measures and trade pressure through Section 232 of the Trade Expansion Act and Section 301 of the Trade Act. She emphasized the importance of companies incorporating tariff risks into their contracts as part of comprehensive risk management strategies.

Attorney Park Jung-hyun from Kim & Chang warned that merely being a Korean product doesn't eliminate all risks associated with U.S. economic security regulations. He advised companies to maintain comprehensive documentation, including not only proof of origin but also records of component and process histories, ownership structures of trading partners, and assessments of whether technologies fall under export control regulations.

KITA announced plans to host the 2026 KITA International Conference on November 30, featuring domestic and international experts. The conference will examine evolving trade policies of major nations, supply chain restructuring trends, and explore new growth drivers and strategic responses for Korean exports.

As an economic organization, KITA is dedicated to supporting domestic companies in expanding exports and penetrating overseas markets. Its activities encompass policy advocacy in response to global trade environment changes, market intelligence provision, and assistance in resolving trade-related challenges.

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