South Korean media: US strengthening supply chain will have long-term adverse effects on South Korea

The Korea Institute for Industrial Economics and Trade released a report on July 4 stating that the US government's global supply chain policy may have long-term adverse effects on the South Korean economy.

According to BusinessKorea, the report said that the U.S. industrial policy of strengthening the supply chain is expected to have a positive impact on South Korea's semiconductor and electric vehicle (EV) battery industries in the short term. The U.S. government is expected to provide more incentives for companies investing in the United States, which will help improve the business environment for South Korean companies. At the same time, as the United States further protects its domestic semiconductor industry, South Korean companies will be able to gain opportunities to further lead Chinese companies.

The report also mentioned that the U.S. EV battery market is about to see a surge in demand, and Korean suppliers are expected to gain the largest market share as the government will restrict the business of Chinese battery suppliers.

However, in the long run, the United States' enhanced competitiveness in the semiconductor field will inevitably affect the position of related Korean companies in the global market; in the field of EV batteries, the United States is expected to focus on supporting American companies and reduce incentives for foreign companies.

The Korea Institute for Industrial Economics and Trade pointed out that South Korea needs to deal with these policies with a long-term perspective. The United States and some other developed countries are dealing with supply chain issues from the perspective of national security, while in South Korea, national security is still separated from technology and industry.