00:00 Are the U.S. midterm elections someone else's problem?
01:35 Directly tied to our wallets?
02:23 What about the defense cost-sharing bill?
03:05 Republicans vs. Democrats: No matter who wins
1. U.S. Midterms: Not Someone Else's Problem
The midterm elections, which will elect more than a third of the U.S. Senate and all 435 members of the House, are just around the corner. The ultimate battleground of this election, which will determine the future power in the U.S., is whether the Republican Party, which currently holds both the White House and both houses of Congress, will maintain its congressional power, or whether the opposition Democratic Party will recapture the House and apply a powerful brake. However, this battle is by no means someone else's problem across the ocean. This is because our export companies, the wallets of our citizens, and even the security landscape of the Korean Peninsula could be shaken to their core. The place facing the most immediate crisis is our export companies. Korean companies have poured tens of trillions of won into the United States, building semiconductor, electric vehicle, and battery factories one after another.
[Donald Trump / U.S. President: In addition to the $50 billion already pledged by South Korea for the Alaska project, Taiwan is also planning to invest $4.4 billion.]
However, the White House's America First policy and tariff pressure cards continue to choke our companies. Whether our companies can catch a breather depends on the outcome of this election.
If the Democrats take control of the House, they can put a strong political brake on the executive branch's unilateral tariff rampage through hearings and budget deliberations. Conversely, what happens if the Republicans succeed in defending both houses of Congress? Trade pressures demanding "build more factories and create more jobs in the U.S." will inevitably become much fiercer.
2. Directly Tied to Our Wallets?
The second issue is directly tied to your wallet. Lately, the dollar exchange rate and U.S. Treasury yields fluctuate almost every day. This causes dry agony not only for retail investors who have poured over 100 trillion won into U.S. stocks, but also for domestic stock investors. Looking at past elections, market uncertainty tended to ease somewhat once the midterm elections concluded. If the opposition Democratic Party wins the House, creating a divided government where the opposition controls the legislature, it will become difficult for the executive branch to recklessly borrow money to pump liquidity or push for tax cuts. In that case, the issuance of government bonds would decrease, and soaring interest rates and the dollar exchange rate are likely to breathe a sigh of relief. On the other hand, if the Republicans continue to monopolize Congress, policy drives that accept fiscal deficits may continue, prolonging the tunnel of high interest rates and high exchange rates.
3. The 'Defense Cost' Bill?
The last issue is the "defense cost-sharing bill," which involves both security and money. Everyone is well aware of the Trump-style transactional alliance stance. The prevailing outlook is that immediately after the election, pressure to drastically increase the cost of stationing U.S. forces in Korea will intensify. The U.S. Congress serves as a safety valve in this situation. During the first Trump administration, Congress set a precedent through the National Defense Authorization Act by placing a barrier that prevents the arbitrary reduction of U.S. forces in Korea. This is why it is important how strongly politicians who value the traditional South Korea-U.S. alliance hold their ground in Congress. Only then can they block the White House's unreasonable demands to extract defense costs using the reduction of U.S. forces in Korea as leverage.
4. Republicans vs. Democrats: No Matter Who Wins
Looking at the grassroots sentiment in the U.S. ahead of the election, the opposition Democratic Party is widely projected to have a strong chance of regaining a majority in the House. Meanwhile, the Senate is seeing ultra-tight races separated by 1 to 2 percentage points in 5 to 6 battleground states. A knife-edge competition is underway where the majority party could flip by just one or two seats. As the sentiment of moderate voters, exploding under soaring inflation and accumulated living cost burdens, fluctuates fiercely, the Republicans are also staking their lives on defending their final line. Of course, whichever side wins, one thing is clear: the huge and fierce wave of America First will not easily recede. Ultimately, from the very moment the election ends, we must sharply delve into the newly formed congressional power landscape. It is a time when sophisticated and smart U.S. diplomatic strategies by our government and companies are more desperate than ever.
(Reported by Lee Hanseok | Produced by Shin Hee-suk | Video by Park Eun-ha | Video Editing by Ahn Jun-hyeok | Graphics by Lee Su-min | Produced by SBS Digital News)
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