S Korea must now prepare for global trade war

The prospect poses a grave challenge to South Korea, whose economy relies heavily on exports. 
It is still too early to predict how many and how fierce the battlefronts will be, but the latest statements by US President Donald Trump and his counterparts in China, the European Union, Canada and Mexico point to a large-scale trade war in the making. 
Trump declared war last Friday by announcing a 25 per cent tariff on all steel and a 10 per cent levy on aluminium imported to the US. He invoked the rarely-used Section 232 of the 1962 Trade Expansion Act, which authorises the Secretary of Commerce to conduct comprehensive investigations to determine the effects on US national security of any imports.
The latest in a series of “America First” initiatives, Trump’s decision has met with swift backlashes from major trading nations, including Washington’s security allies. 
China threatened to slap retaliatory tariffs on US farm products like soybeans, and the EU said it too could impose levies on signature American brands like Harley Davidson motorbikes, Levi’s jeans and bourbon. Canada and Mexico, both members of the North American Free Trade Agreement, also warned they would take strong countermeasures. 
This kind of tit-for-tat retaliation raises the spectre of protectionism and endangers the global free trade system backed by the World Trade Organisation.
As with his other America First policies, Trump’s protectionist move also faces criticism inside the US, with advisers in the White House reportedly opposing the steel and aluminium levies. 
Critics point out they will do more harm than good to the overall US economy. One convincing argument is that the tariffs, which are designed to provide a shield for the US steel industry, will increase steel prices and thus backfire on US consumers and manufacturers that use steel, including the car industry. 
Trump, however, remains typically steadfast and defiant. As one foreign leader after another warns of countermeasures, the Commander-in-Chief has even dialled up the tone, going on to threaten to impose duties on European cars. 
With the world on the brink of the fiercest trade war in decades, the challenge before South Korea is evident. Most of all, both the government and businesses need to minimise negative impact on domestic industries. 
South Korea was already feeling heat from Trump’s protectionism after Washington pushed up import tariffs on washing machines and solar panels 
The 25 per cent tariff on steel products, South Korea’s seventh-largest export by value to the US, also comes on top of anti-dumping and countervailing duties imposed on them. No wonder South Korea’s steel exports to the US plummeted 38 per cent to $3.25 billion last year from $5.2 billion in 2014. 
The new US action deals a heavy blow to South Korean steel companies, which now need to work together to minimise the impact by raising competitiveness and diversifying export markets. 
What is unfolding before us is also a strong reminder that we need a root-and-branch review of our trade policy with the US under Trump. One certainty here is that, when it comes to economic matters, there are no permanent friends or enemies.