Bank of Korea Monetary Policy Board member Jang Yong-seong co-authored an op-ed with University of Houston professor and Dallas Federal Reserve economist Kei-Mu Yi, published recently at the Hoover Institution, arguing that open trade with Korea strengthens US economic security. The piece, titled 'How Trade with Korea Boosts US Economic Security,' emphasizes that tariff reductions rather than increases have historically enhanced American prosperity. Jang positions the Korea-US Free Trade Agreement as evidence that market access drives income growth, estimating post-war globalization raised US welfare approximately 10 percent and Korea's welfare 70 percent. The Hoover Institution, a Stanford University think tank founded by President Herbert Hoover in 1919, provided the platform for the policy analysis.
Korea-US FTA Expanded Markets for Both Economies
Jang cited the Korea-US Free Trade Agreement as a primary example of tariff reduction benefiting both nations. The FTA enabled the United States to broaden agricultural and service sector markets while Korea expanded export territories. Jang stated the agreement represents one case among evidence accumulated across multiple countries over centuries, demonstrating that global market access and international trade lead to overall income increases. He acknowledged trade gains are not evenly distributed but referenced research showing globalization increased service sector employment, creating total benefits that offset distributional side effects. The op-ed added that economic policy can serve as leverage to advance geopolitical interests beyond direct economic gains.
Trade Halt Would Cost US $60 Billion in Annual Consumption
Jang estimated a complete cessation of Korea-US trade would reduce US economic welfare by 0.3 percent, equivalent to $60 billion in annual personal consumption expenditures. This calculation assumes Korean products could be substituted with goods from other countries. Jang noted that incorporating dynamic effects and considering advanced products difficult to replace could push the welfare reduction closer to 1 percent. He assessed US economic security rests on the foundation of open global markets, emphasizing that international market access helps mitigate the aftermath of negative shocks. Jang stated US economic resilience does not require producing all components of every supply chain domestically, noting leading manufacturers source parts from over 20 countries.
Korea Ranks Top 3 Globally in Semiconductors and EV Batteries
Jang highlighted Korea's manufacturing capabilities across strategic sectors. Korea ranks sixth globally in steel production and places within the top three worldwide in semiconductors, shipbuilding, and electric vehicle batteries. Jang argued countries like Korea possess the capacity to enhance US economic resilience, describing Korea as a partner that provides both technological sophistication and production scale alongside a long-standing security alliance. He stated that strengthening economic ties with economically and technologically advanced nations already deeply integrated into the US economy can elevate American economic security, noting the op-ed focused on Korea but the implications extend to other economies.
Korean FDI in US Grew to $25.3 Billion by 2025
Korean foreign direct investment in the United States increased from $7.4 billion in 2011 to $25.3 billion in 2025, according to figures cited by Jang. This investment growth reflects deepening economic integration between the two countries across manufacturing and technology sectors. Jang emphasized Korea's role as a strategic partner combining security alliance credentials with substantial capital deployment in the US economy. The investment trajectory supports Jang's argument that Korea will continue playing a significant role in US economic security, providing both financial resources and advanced manufacturing capabilities to the American market.
FAQ
What economic impact did Jang estimate from a Korea-US trade halt?
Jang estimated a complete cessation of Korea-US trade would reduce US economic welfare by 0.3 percent, equivalent to $60 billion in annual personal consumption expenditures, assuming Korean products could be substituted with goods from other countries. He noted that incorporating dynamic effects and advanced products difficult to replace could push the welfare reduction closer to 1 percent.
How does Korea rank globally in strategic manufacturing sectors?
According to Jang's op-ed, Korea ranks sixth globally in steel production and places within the top three worldwide in semiconductors, shipbuilding, and electric vehicle batteries. He stated these capabilities position Korea to enhance US economic resilience through technological sophistication and production scale.
