The View | Trade war: China’s large market the big loophole in US ‘friendshoring’
- With its strength in critical sectors like batteries and chips, South Korea’s suitability as a friendly shore is compromised by its companies’ dependence on Chinese inputs and demand
- Extending China waivers for Korean companies, as the US has done, only undermines its own industry policy
In particular, the Biden administration’s review of supply chains highlighted vulnerabilities in four critical sectors – pharmaceuticals, critical minerals, electric vehicle batteries and semiconductors – and emphasised diversification methods such as partnerships with allies such as Japan and South Korea.
While Japan’s Panasonic remains a major player, Korean manufacturers have steadily grown in importance.
Besides, given underlying factors such as the free trade agreement between the United States and South Korea, and cordial ties not just between Seoul and Washington, but also between Seoul and Tokyo, South Korea would seem an ideal friendly shore to diversify supply chains towards, particularly for critical products like batteries and semiconductors.
However, Seoul has not always viewed Washington’s industrial policy favourably. South Korea is among the partner nations raising concerns or taking issue with how the US’ Chips and Science Act and Inflation Reduction Act would impact Korean companies.
