Republican Victory? Democratic Recapture? Walking on Thin Ice… Which Outcome Benefits South Korea?

1. The U.S. Midterm Elections Are Not Someone Else's Problem
The midterm elections, which will elect more than one-third of the U.S. Senate and all 435 members of the House of Representatives, are just around the corner. This election, which will determine America's future power, has a major battleground: whether the Republican Party, which holds both the White House and both chambers of Congress, will maintain its legislative power, or whether the opposition Democratic Party will recapture the House and apply a powerful brake. However, this fight is by no means someone else's problem across the ocean. This is because it could fundamentally shake our export companies, the wallets of our citizens, and even the security landscape of the Korean Peninsula. Our export companies are facing the most immediate pressure. Over the period, Korean companies have poured tens of trillions of won locally into the United States, successively building semiconductor, electric vehicle, and battery plants. Yet, the White House's America First policy and tariff pressure cards continue to weigh heavily on our companies. Whether our companies can catch a breather depends on the results of this election. If the Democrats take control of the House, they can apply strong political brakes to the administration's unilateral tariff blitz through hearings and budget deliberations. Conversely, what happens if the Republicans succeed in defending both chambers of Congress? Trade pressures demanding "build more factories and create more jobs in the United States" will inevitably become much harsher.

2. Directly Connected to Our Wallets?
The second issue is directly connected to your wallet. Lately, the dollar exchange rate and U.S. Treasury yields are fluctuating day by day. Not only "Seohak ants" (Korean retail investors investing in U.S. stocks) who have poured more than 100 trillion won into U.S. stocks, but also domestic stock investors are suffering. Looking at past elections, once the midterm elections are over, market uncertainty has generally subsided to some extent. If the opposition Democratic Party takes the House, creating a "divided government" where the opposition controls the legislature, it will become difficult for the administration to recklessly incur debt to print money or push for tax cuts. In turn, as government bond issuance decreases, soaring interest rates and the dollar exchange rate are highly likely to find some breathing room. On the other hand, if the Republicans continue to monopolize the legislature, policy drives at the expense of fiscal deficits could continue, prolonging the tunnel of high interest rates and high exchange rates.

3. What About the "Defense Cost Bill"?
The last issue is the "defense cost 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 safety valve in this situation is none other than the U.S. Congress. During the first Trump administration, the U.S. Congress established a precedent by putting up a barrier through the National Defense Authorization Act to prevent arbitrary reductions 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 we block the White House's unreasonable demands to extract defense costs by 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 predicted to have a strong chance of recapturing a majority in the House. Meanwhile, ultra-tight races within a 1 to 2 percentage point margin are unfolding in 5 to 6 battleground states for the Senate. A walking-on-thin-ice battle continues where the majority party could flip by just these 1 or 2 seats. As centrist voter sentiment, explosive over soaring inflation and accumulated living cost burdens, violently fluctuates, the Republicans are also putting everything on the line to defend their final line. Of course, no matter which side wins, one thing is clear: the huge and fierce wave of America First will not easily subside. Ultimately, from the very moment the election ends, we must meticulously delve into the newly forming legislative power landscape. It is a time when meticulous and smart diplomacy strategies toward the U.S. by our government and companies are more desperate than ever.

(Reported by Lee Hanseok | Produced by Shin Hee-seok | Video by Park Eun-ha | Video Editing by Ahn Jun-hyeok | Design by Lee Soo-min | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.