The Return of Tariff Policy: Strategic Responses under the Second Trump Administration

• Author Gusang Kang
• Series314
• Date2025-04-30

With Donald Trump’s return to the White House for a second term, global markets and policymakers are reassessing the trajectory of U.S. trade policy. At the center of this reevaluation is the renewed emphasis on aggressive tariff measures that defined Trump’s first term. This article examines the rationale behind Trump’s tariff-centric approach, explores the economic and geopolitical ramifications of its revival, and proposes strategic responses for the Korean government and businesses.

President Trump’s trade agenda continues to represent a fundamental departure from the multilateral and liberal trade order that guided U.S. policy for decades. Tariffs have again emerged as a primary tool to rebalance trade relationships, protect domestic industries, and project American strength. Hallmark examples from his first term—including the U.S.-China trade war, Section 232 tariffs on steel and aluminum, and Section 301 measures against China—set the precedent for the current direction.

The Trump administration views tariffs as strategic leverage to pressure trade partners into addressing structural concerns such as trade imbalance, intellectual property theft, market access restrictions, and currency manipulation. While critics point to higher consumer costs due to inflation and retaliatory actions, Trump’s political base sees these policies as necessary to defend American jobs and sovereignty.

In line with his campaign promises, President Trump has proposed a 10% universal tariff on all imports—marking a major shift from targeted to blanket trade barriers. According to Mckibbin and Shuetrim (2024), such a policy could reduce U.S. GDP by up to 1%, and trigger renewed global trade frictions.

The second Trump administration has intensified its hardline stance on China. In addition to the $350 billion in tariffs imposed during his first term, the administration has now introduced a 20% fentanyl-related tariff and a 125% reciprocal tariff on Chinese goods. According to BIS (2020), U.S.-China trade declined by 19.3% during the 2018–2020 period as a consequence of the first Trump administration’s tariffs on Chinese goods.2 The newly implemented measures are expected to further accelerate supply chain decoupling, particularly in high-tech sectors.

On April 2, 2025, President Donald Trump officially launched his administration’s unilateral trade agenda by signing an executive order imposing reciprocal tariffs on U.S. trading partners. This measure was introduced based on the view that persistent U.S. goods trade deficits are weakening the nation’s industrial base and posing threats to national security. Under the order, a minimum 10% tariff is applied to all U.S. imports, with an additional 11% to 50% tariff levied on imports from countries running significant trade surpluses with the U.S. As a result, South Korea—whose trade surplus with the U.S. accounted for 50.2% of the U.S.’ imports in 2024—is now subject to a 25% reciprocal tariff, causing its effective tariff rate to surge from 0% in 2024 to 23%. This action represents a fusion of the universal tariff and reciprocal tariff policies that President Trump pledged during his 2024 re-election campaign.

National security tariffs under Section 232 are being reinstated, with steel and aluminum subject to 25% duties. In 2018–2019, these measures contributed to a 6% increase in U.S. domestic steel prices and triggered billions of dollars in retaliatory tariffs on American exports.

Additionally, the Trump administration is considering tariffs on semiconductors and pharmaceuticals—deemed strategic sectors vital to national security. These actions are designed to stimulate domestic production and reduce dependence on foreign sources, particularly in Asia. However, they also risk raising costs for U.S. manufacturers and healthcare providers. Green technologies are similarly under threat, as Trump remains staunchly opposed to Biden-era subsidies favoring foreign EVs and renewable components.

The broader consequences will ripple through global supply chains. Tariff-induced disruptions will likely prompt firms to reconfigure sourcing, accelerating the trend toward “reshoring” and regionalization, albeit at the cost of efficiency. Moody’s estimates that a 10% universal tariff could increase inflation by approximately 1.1 percentage points annually.3 Furthermore, these policies are straining the multilateral trading system. Retaliatory tariffs are escalating, further weakening the credibility of the WTO dispute settlement mechanism and undermining rules-based trade. This may prompt a global strategic realignment and the deepening of regional trade blocs.

To address the challenges arising from the Trump administration’s renewed and assertive tariff agenda, the Korean government and private sector must adopt a multi-faceted strategic response. Diplomatically, Korea should strengthen engagement with U.S. policymakers, industry stakeholders, and international forums to preserve existing exemptions and shape policy outcomes. Actively leveraging the KORUS FTA consultation mechanisms and the Indo-Pacific Economic Framework (IPEF) will be essential. The Korean government must enhance support for SMEs, which are less equipped to manage tariff complexity. This includes expanded trade insurance, export financing, and joint public-private initiatives for risk mitigation.

Corporations must boost operational resilience by diversifying production—both to Southeast Asia and within the U.S., as exemplified by Hyundai’s $5.5 billion EV plant in Georgia, which aligns proactively with U.S. industrial strategy. Compliance infrastructure must also be strengthened. Korean firms should invest in robust systems to navigate evolving rules, particularly under new trade regulations. Transparent and traceable supply chains will be a prerequisite for tariff relief. Furthermore, further solidifying Korea’s presence in high-tech and bio industries within the U.S. remains a strategic imperative. Doing so not only reduces vulnerability to tariffs but also builds bilateral economic ties that make protectionist policies politically costlier for Washington.

Under President Trump’s renewed leadership, tariffs have once again become a cornerstone of U.S. trade policy. Though the motivations—economic nationalism, bargaining leverage, political optics—remain consistent with his first term, the global environment has become more volatile. Supply chain fragility, inflation pressures, and rising geopolitical tensions magnify the consequences of tariff actions. For South Korea, the stakes are especially high. Each new tariff policy affects not only trade flows, but also industrial strategy, supply chain design, and geopolitical orientation. Korean stakeholders must act swiftly—leveraging diplomacy, investment, and institutional reform—to safeguard national interests in this protectionist era. Early coordination between government and industry will be key to weathering the turbulence of a resurgent Trump trade doctrine.

Gusang Kang ✉️

Ph.D., Research Fellow, Head of North America and Europe Team

Prev Next List