This study analyzes and evaluates the impact of foreign economic policies implemented during the Trump administration's four-year tenure, and aims to predict the direction of foreign economic policies under the Biden administration launched following the 2020 presidential election. The former President Trump put “America First” as the slogan of economic policies and imposed import restrictions and tariffs on trading partners based on Sections 201, 232, and 301 of U.S. trade acts. The Trump administration's trade policies using various trade remedies not only aroused great antipathy from countries affected by those measures, but also led to retaliatory tariffs on U.S. goods and services from other countries. In addition, the Trump administration strongly promoted renegotiation, claiming that some existing trade agreements had been concluded unfavorably to the U.S., and also actively conducted new trade negotiations based on bilateralism.

   In this study, we conduct an empirical analysis to find out how the Trump administration's tariffs on imports had an effect on the U.S. economy. First, we examine the effects of the Trump administration's tariffs on steel and aluminum under the Section 232 remedy and tariffs on imports from China under the Section 301 on employment in the U.S. According to the empirical results, the tariffs have the effect of increasing employment through the protection of domestic industries. Moreover, looking at the effect of tariff imposition on industrial production, we find that it has the effect of reducing industrial production through both protecting domestic industries and imposing retaliatory tariffs. Summarizing the above results, we argue that the Trump administration's tariff measures had a somewhat positive effect on the U.S. industrial employment, but it is difficult to say that the policy effect that President Trump initially expected was achieved as the measures also had a negative effect on industrial production.

   In addition, this study conducts an empirical analysis of the impact of the 2018 tax reform on U.S. foreign direct investment (FDI) to examine the impact of other foreign economic policies promoted by the Trump administration. Based on the empirical results, the tax reform had a short-term effect in reducing U.S. FDI. However, the sharp decline of U.S. foreign direct investment in 2018 compared to that in 2017 is mainly due to returning foreign income, held by U.S. multinational technology giants such as Google, Apple and Amazon in tax havens such as the British Bermuda and Ireland, to their home country.

   President Biden strongly criticized the former Trump administration's unilateral and protectionist trade policy for not only severely eroding the U.S. leadership in the world but also having a negative impact on the domestic economy. Nevertheless, policy actions of the Biden administration so far are not likely to be significantly different from those of the Trump administration. Although the Biden administration recently reached an agreement with the EU on the withdrawal of tariffs on steel, those tariffs on other trading partners and the Section 301 tariffs on Chinese imports are still in place. The Biden administration, however, is expected to pressure China in various different ways from the Trump administration. For example, the Biden administration will continue to demand the implementation of China's commitments to the Phase One trade agreement reached by the former Trump administration with China. Furthermore, the administration is anticipated to link human rights and environmental issues to trade measures to apply more pressure on China.

   Like the Trump administration, the Biden administration's other foreign economic policy directions are showing strong protectionist perspectives. President Biden witnessed the shortage of essential medical supplies such as masks, respirators, and protective suits, as well as semiconductors for vehicles, during the global COVID-19 pandemic. Accordingly, the Biden administration has been shaping policies to address these kinds of supply chain risks due to the pandemic. For example, President Biden has decided to strengthen application of the “Buy American Act,” which stipulates that domestic products can be used preferentially in the federal government procurement sector. Moreover, he has implemented policies to reorganize the global supply chain with a focus on the U.S. in key products (semiconductors, high-capacity batteries, critical minerals, pharmaceuticals and active pharmaceutical ingredients) and industries (defense, health, ICT, energy, transportation, agriculture) excluding China.

   Based on the above analysis, this study presents the following policy implications. First, in preparation for the modernization of digital trade rules, it is necessary to strengthen digital trade cooperation with middle power countries participating in the WTO e-commerce negotiations along with a detailed analysis and review of the economic impacts. This is because the U.S. is leading the WTO e-commerce negotiations by demanding high-quality digital trade standards, and these negotiations are being conducted mainly in large advanced economies including the U.S. and the EU. Second, in the process of reorganizing the global supply chain centered on the U.S., Korea needs to take advantage of the benefits provided by the U.S. federal government and strengthen cooperation in the supply chain based on norms with the U.S. Through the ROK-U.S. summit in May 2021, Korea is planning to make large-scale investments in the U.S. in the semiconductor and electric vehicle battery fields, and the U.S. also wants to make up for weak points in its supply chain in these fields. Third, Korea needs to reach an amicable agreement with the U.S. on trade remedies that have already been applied. As seen in the results of the previous empirical analysis, it is difficult to see that the tariffs imposed by the former Trump administration had the expected positive impact on U.S. industries. In this regard, Korea should also strive to persuade the U.S. to replace existing relief measures such as the Section 232 steel quotas by raising the need to strengthen its supply chain with the U.S.