[North Korea and the World] The Trump Administration's Second Term Strategy Linking Economy and Security

YouTube Link: https://www.youtube.com/watch?v=_CvX-hjc3P4

Video Script

The Trump Administration's Foreign Policy Stance and the Difficulty of Analysis

If my analysis is incorrect, the tone of the statements could escalate. As discussions on the alliance with South Korea, cost-sharing, and economic issues intensify, there's a possibility of South Korea being asked, "Are you with us?" Everything could be determined by that level of commitment. Thank you to our viewers of North Korea and the World. In recent months, my primary focus has been on the United States rather than North Korea. The subjects and regions I research are the US and North Korea. While I currently serve as the Director of the Center for North Korean Studies at the East Asia Institute and a professor of North Korean Studies at Ewha Womans University, thus dedicating more time to North Korea research, overall, I am observing the US and North Korea. Consequently, the relationship with the US must also be considered. I have recently re-examined my research, and particularly since the advent of the Trump administration, the proportion of research on the US has increased.

Typically, the research ratio for North Korea and the US is about 6:3-4, but with the Trump administration, it has become nearly 50-50. Today, I am compelled to speak on this topic as well. As a researcher, understanding the Trump administration itself and Trump as an individual requires considerable effort. Generally, the United States is a relatively transparent country. Especially in the realm of foreign policy, which I research, official US documents are released, and information is confirmed through statements by responsible officials or congressional hearings. However, Trump is a unique figure, and the foreign policy he pursues approaches things in a very different way than what we are accustomed to, making analysis extremely difficult. I believe this requires a significant amount of time.

Furthermore, from an international politics perspective, the current situation has become a proving ground for international relations researchers. This is clear evidence that the existing world order is changing, and researchers must present answers, to a certain extent, on how to understand the direction of this change and the current situation, and how to predict the future. This is a very challenging task. Therefore, from the perspective of an international relations researcher, the accuracy of whose analysis will be further confirmed in the not-too-distant future.

The Trump Administration's Key Demands: Tariffs and Defense Cost Sharing

My introduction has been lengthy, and I feel a burden even in leaving records through videos in this regard. Nevertheless, I wish to continue contemplating Trump with you. Since Trump's emergence, there have been situations that have made things very difficult for us. He is shaking up the world order, and especially at this point, 100 days in, there are two demands that have been clearly confirmed for us. One is the mention of tariffs, signifying a reduction in the fiscal and trade deficits that the United States is experiencing.

From the perspective of someone who continues to research the United States, I too find it very difficult to keep up with this tariff policy. I suspect you feel the same way, as it changes so frequently. They make a decision and then reverse it; it's hard to find consistency, and the constant changes clearly make it very difficult to understand what they are thinking, what their goals are, and what they ultimately want. Another issue, which is unfolding similarly not only for South Korea but also for key US allies, is defense cost-sharing. There has been a clear increase in cost-sharing compared to the past, and in a way, they are saying that the primary responsibility should lie with each ally. The United States states its focus is on containing China. If you watch my previous videos, I covered this in considerable detail. I analyzed everything from Elbridge Colby's policy to the US's interim National Security Strategic Guidance.

Today's discussion is, in fact, a continuation of that. As I mentioned, my biggest question is what exactly is Trump thinking? Trump is shaking up the world order; in what direction are this world order, with its two pillars of economy and security, moving? Or, in the current situation, what is the basis and foundation of Trump's policies? This is something that must be seriously considered, and various interpretations are being proposed. I do not intend to cover all the different interpretations today. I will organize and present them if an opportunity arises separately. The strategic direction and perception that Trump is currently leading, often referred to as his worldview, have at least six or more interpretations emerging. I am attempting to interpret Trump through various domestic US documents and research materials, and the interpretations are extremely polarized. I will discuss this at another opportunity as well.

Economic Security Strategy Through the Lens of Steven Mnuchin's Report and Speeches

Today, I intend to explain how the economic and security aspects of the United States are linked, and how Trump's current discussions on tariffs and defense cost-sharing are manifesting as a combined form. The fundamental basis for this explanation comes from the reports and speeches of Steve Mnuchin, as well as his writings. Who is Steve Mnuchin? He is currently the Chairman of the White House Policy Council. He is an economist, and this report, published in November 2024, made him very famous. The English title is 'Users Guide to Restructuring the Global Trading System,' which roughly translates to 'Guidelines for Restructuring the Global Trading System.' This report has primarily garnered attention from economic experts, but I consider it one of the most crucial documents for analyzing the Trump administration's strategy, not only in economics but also in its linkage with security. The Trump administration is attempting to provide...

provide the theoretical background for economic security. I will not delve deeply into this report. There are already numerous analyses of the report, and they can be easily found domestically and internationally. What I want to focus on a little more today is a speech Steve Mnuchin gave in April at the Hudson Institute in the United States. Interestingly, this speech is posted on the White House website. While the website generally contains information from previous administrations, it is primarily for promoting the President's policies. Especially under the Trump administration, the White House website is filled with President Trump's achievements and accomplishments. Uniquely, the full text of Steve Mnuchin's speech at the Hudson Institute is posted there. I believe this is because the White House, and Trump himself, largely agree with Steve Mnuchin's remarks, and they acknowledge that these remarks reflect the policy basis and perception of the Trump administration. Therefore, I believe it is something that researchers should pay close attention to. It was delivered on April 7, 2025. Let me start by mentioning a few key points. First, it reveals a perception of the world order. The most significant point is that the United States is no longer a 'benevolent hegemon.' The term 'benevolent hegemon' is used, and when discussing this concept, it implies that the US has been providing global public goods in security and the economy. One thing I would like to mention is...

I will not criticize the policies or perceptions of Steve Mnuchin or the Trump administration here. If I were to begin criticizing, it would start with the debate in academia regarding whether the US is a 'benevolent hegemon' or not. Furthermore, what they advocate, such as tariffs and the issue of reserve currencies, is actually very far from dominant economic theories. Therefore, there is ample room for criticism. I will not offer criticism today. This is because if I start criticizing, there is no end to it. Another characteristic that emerged during the first term of the Trump administration, in my opinion, is that there is less criticism of Trump's statements or policies now. During Trump's first term, there was criticism of his statements or strategies, but in his second term, such critical voices have significantly diminished.

Rather, as I have been attempting in recent months, the focus is much more on contemplating what the Trump administration is actually thinking, what direction it is heading, and how each country will respond and prepare accordingly. When I meet with researchers domestically and internationally, we often discuss similar points. There are almost no critical or evaluative voices; instead, there is a stronger effort to understand what the Trump administration is doing. Therefore, I understand your interest in what I will say today, and researchers might naturally think, 'That doesn't make sense, why are they saying that?' However, one thing is certain: this is not my statement, but Steve Mnuchin's, and it is the Trump administration's statement, and my purpose today is to introduce that statement to you. Let me return to the point. The United States, as a benevolent...

hegemon, provides public goods in economy and security. This is Steve Mnuchin's statement, although he did not use the term 'benevolent hegemon.' However, the meaning is present. He used the following expression: 'The United States has maintained the most peaceful era in human history by providing security and the dollar as a reserve currency, thereby sustaining the global financial system.' He states that by providing these two public goods, economy and security, the US has enabled the most peaceful era in human history. He then provides an example: China and Brazil. He refers to the dollar as a reliable, liquid, and stable currency for transactions between China and Brazil. He asserts that this was possible because of the dollar. Therefore, the currencies of those countries are not systems that can be used for transactions between them. Because the US dollar played such a role, China and Brazil could trade freely. He states that free trade was possible. Furthermore, he argues that the US military has stabilized global security, enabling...

The Burden of Providing Public Goods and the Shift in Perception of International Order

free trade for countries like Brazil and China. This highlights the emphasis on the role of the reserve currency and security. However, the United States can no longer supply these. The US has borne too many costs to provide these public goods. US military personnel have made sacrifices to protect global security, and the American people have borne excessive burdens to maintain the financial system. The burden has been particularly heavy in the financial sector, leading to persistent currency distortions due to the dollar's role as the reserve currency. This is because there is a continuous demand for a reserve currency. As mentioned earlier, even Brazil and China trade in dollars, creating demand. However, because it is excessively strong, the flow of international trade has been distorted. While conventional economic models and theories suggest that a persistent large trade deficit should lead to a depreciation of a country's currency, thereby reducing the trade deficit, the dollar...

...as the reserve currency, has not done so and remains strong. Consequently, this strong dollar, combined with unfair trade practices by other countries, has led to a massive trade deficit for the United States. This trade deficit has devastated US manufacturing and the working class, and when the dollar is expensive, the cost of goods manufactured in the US also becomes high, leading to a loss of competitiveness in manufacturing. This has caused difficulties for the US, and its citizens have been exposed to excessive taxation. These phenomena associated with being a reserve currency nation are being discussed, and I must re-emphasize that this is the argument and perception held by Steve Mnuchin and the Trump administration. In particular, their argument is that some countries have intentionally distorted their currencies.

They have intentionally devalued their currencies to maintain a strong dollar, thereby engaging in free-riding. The country most critically pointed out is, of course, China. This is how Steve Mnuchin assesses and views the situation, which I believe reflects Trump's perception. Of course, I cannot definitively say whether Trump perceives this in such an organized and theoretical manner, but if a theoretical background is to be provided, this is how Steve Mnuchin sees it. Therefore, the policies of the Trump administration are very clear. Other countries have free-ridden by utilizing US public goods in security, and they explicitly state that they will no longer tolerate this free-riding. They claim that because they did not tolerate free-riding for these reasons during Trump's first 100 days, the US has rebalanced its defense and trade relations to achieve a more equitable position. This is a narrative praising Trump's accomplishments. Furthermore, tariffs are being imposed to rebuild the devastated US industrial base and establish trade conditions favorable to American workers and businesses.

Preventing Free-Riding and the Policy of "America First"

stories are being told. They state they will proceed in this direction. Specifically, they emphasize three points. The first is currency adjustment. It is highly likely that the issue of exchange rates will continue to be raised throughout the remainder of Trump's term. As mentioned earlier, due to the strong dollar, their trade deficit persists, and they are losing manufacturing competitiveness. To resolve this, they need to lower the dollar's value, but since the US dollar is the reserve currency, it is difficult to lower it. Therefore, they intend to establish new rules through one-on-one bilateral negotiations. Some are discussing the idea of a 'talk-as-you-go' agreement, and there are even discussions about creating 100-year bonds that do not pay interest. The important point here is that they clearly aim to lower the dollar's value to restore US export competitiveness and reduce the trade deficit. A few days ago, I met with a Chinese scholar, and when asked about the future of US-China relations, he immediately brought this up. He believes that ultimately, the exchange rate issue will be the most...

Currency Adjustment, Tariffs, and Strengthening Economic Security Through Manufacturing Revival

important issue. Therefore, I believe this is also a very important issue for us economically. The second point is tariffs. We have suffered enough during the first 100 days. I still refer to this as 'reciprocal tariffs' in the US, but I will refrain from criticism and make only one point. This is not reciprocal tariffs; it is unilateral tariffs. We are not imposing equivalent tariffs on the US, yet they have unilaterally announced tariffs. Regardless, Trump has repeatedly stated that tariffs are the most beautiful word and are important.

The fundamental thinking of Trump and Steve Mnuchin is that tariffs are ultimately paid by the exporting country that is subjected to them. I will not criticize this. This is their assertion. When tariffs are imposed, mainstream economic thought suggests that US companies and consumers will inevitably bear the burden of these tariffs. However, their thinking is that ultimately, when tariffs are imposed, the country subjected to the tariffs, such as South Korea, will have to bear them. The reason for this assertion is that countries with large trade surpluses have few alternative markets besides the US. Therefore, they are ultimately dependent on the US market, and because they have no choice, the exporting country must bear the tariff burden. In contrast, the US has many options.

For example, they can increase domestic production or trade with countries that engage in fair trade. As you can see from a common-sense perspective, there is ample room for criticism. I will not criticize. Furthermore, their argument is that tariffs contribute to tax cuts and a reduction in fiscal deficits. Specifically, they claim that by utilizing reciprocal tariffs, they can strengthen US export competitiveness as a strategy to eliminate unfair trade barriers, currency manipulation, and dumping subsidies. Indeed, they are imposing tariffs on South Korea, claiming that South Korea has some unfair trade barriers. The utility of tariffs is to lower those barriers. The third point is to revive manufacturing. This is not solely Trump's agenda. The Biden administration also placed great importance on reviving manufacturing. Therefore, one of the foreign policy pillars of the Biden administration was 'foreign policy for the middle class.' What this meant was that Biden viewed the problem of the United States and the world order...

...as the erosion of the American middle class. Therefore, if the middle class is restored, the US, with its strength and capital, and with the consent of the middle class, can once again play a leading role in the world order, providing public goods in security and the economy. That was the fundamental idea of the Biden administration. To protect the middle class, they believed it was necessary to revive manufacturing in what are often called deindustrialized regions. In the process of reviving manufacturing, if necessary, they would implement protectionist trade policies, or provide subsidies through measures like the Inflation Reduction Act or the CHIPS Act to encourage the establishment of factories within the US. That was Biden's thinking.

While the Trump administration emphasizes the importance of manufacturing, whereas the Biden administration seeks to strengthen US manufacturing by offering incentives, the Trump administration employs a coercive approach. For instance, by imposing tariffs, they demand that companies establish factories in the US to avoid paying tariffs. We have experienced this sufficiently. US manufacturing has severely declined, with manufacturing employment decreasing by 10% from its peak, and its share of global manufacturing has fallen by 40%. The Trump administration's emphasis on manufacturing is particularly due to China's strength in manufacturing, which includes essential equipment for US security. During the COVID-19 pandemic, we faced difficulties in procuring masks, most of which were made in China. This is not just about equipment; China produces and supplies a significant portion of goods, and relying on China, which the US considers an adversary, is deemed inappropriate. Therefore, through tariffs...

...the Trump administration aims to expand domestic industrial production facilities. This brings us to the crucial question of how the economy and security are linked, which is the theme of today's discussion. The most defining characteristic of a hegemonic power is the provision of public goods in security and the economy. However, the United States seeks to maintain its hegemonic status by demanding cost-sharing rather than providing these itself. This approach deviates from historical precedents and theories we are familiar with. It's like trying to create a hot iced Americano, and it remains to be seen whether such a policy will be feasible. In any case, the important point is the linkage between security and the economy. They argue that international burden-sharing is necessary to provide public goods in security and the economy. This is based on the logic that the world can be stably sustained and peace can be achieved only if the US leads in providing public goods in security and the economy.

Economic and Security Linkage: Maintaining Hegemonic Status and Demanding Cost Sharing

Ultimately, this signifies the US's intention to remain a hegemonic power. Therefore, the US aims to reorganize the global security and trade systems to ensure its dollar continues to function as the reserve currency. Simply reducing the trade deficit could be achieved by abandoning the reserve currency role, but the Trump administration clearly intends for the US to remain the provider of the reserve currency. For example, they threaten to impose tariffs and sanctions if BRICS nations use currencies other than the dollar. This demonstrates the Trump administration's resolve to maintain its status as the reserve currency provider.

However, they propose cost-sharing through a fair system. Specifically, they argue for sharing the economic burden, represented by economic tariffs, with national security considerations in mind. For South Korea, and indeed for other nations, this presents a significant challenge, especially for us who are directly exposed to the threat from North Korea and rely on US extended deterrence against North Korea's nuclear threat. As discussed in the recent ROK-US 2+2 Ministerial Dialogue, it is natural for South Korea to separate economic and security issues.

It is appropriate to separate the issues of tariffs and defense cost-sharing. However, my concern is that the Trump administration fundamentally links these two. While President Trump has stated that discussions will exclude defense cost-sharing, unfortunately, President Trump's words cannot be trusted, as he is someone who can change his mind at any moment. Therefore, understanding the fundamental approach is crucial, and it clearly involves the linkage of tariffs and cost-sharing, and public goods in economy and security. Recently, although Treasury Secretary Steven Mnuchin's expression has been somewhat lacking, the presence of cabinet members within the Trump administration has been minimal. For example, Acting Secretary of Defense Patrick Shanahan was dismissed, and National Security Advisor John Bolton was fired. While there were expectations for Secretary of Defense Mark Esper, his presence was not significant, and President Trump's dominance means that the cabinet's presence is diminished. However, Treasury Secretary Steven Mnuchin has a presence. He speaks in various forums, presents a stable image, and made a relatively organized statement in a recent hearing. Therefore, based on the experience of the Trump administration, although it is uncertain how long this will last, Secretary Steven Mnuchin's statements are currently meaningful. Secretary Steven Mnuchin has also made similar remarks, stating that tariffs should be imposed in conjunction with national security considerations. I will read it verbatim:

“Various countries around the world will be classified into different groups based on their monetary policies, bilateral trade agreements, security agreements, and values. Each group will be subject to different tariff rates, and conditions for moving to other groups will be presented.” This clearly indicates an intention to link tariffs with security issues, cost-sharing, and defense expenditures. This is also reflected in Steve Mnuchin's report. The report lists over a dozen criteria for trade and security judgments, half of which address traditional economic logic. For example, does the country impose the same tariff rate on US imports as the US imposes on its own exports?

These factors become criteria for assessing tariff burdens or cost-sharing. The other half addresses security concerns. For instance, does the country side with China or Russia in major international disputes? It also includes security issues such as whether the country supports or hinders US security efforts in various regions. They intend to evaluate these security issues in conjunction with economic matters. Therefore, from our perspective, although we have successfully argued that the current tariff issues and defense cost-sharing issues are proceeding separately, we must be prepared, keeping in mind that they can be linked again at any time.

Cost-Sharing Demands Linked to China Containment Strategy

These are the five cost-sharing demands presented by Steve Miran of the Hudson Institute: First, accept retaliatory tariffs on US products. In other words, even if the US imposes tariffs, retaliatory tariffs should not be imposed. This implies contributing to the US treasury. Second, cease unfair trade practices and expand purchases of US products. Third, in terms of security, expand purchases of US weapons and contribute more to defense spending. Fourth, if factories are established in the US and domestic products are manufactured in the US, tariffs will be waived. Fifth, make direct contributions to the US Treasury. As I have repeatedly stated, I will not criticize. These five demands can be seen as a combination of tariff barriers and security commitments. Steve Miran stated the following: From the US perspective, it is not a loss for other countries to maintain their current China policies while accepting high US tariffs. Within this system, high tariffs increase US revenue and simultaneously reduce US security burdens. This implies that if allies do not participate in the US-led containment of China, tariffs will be imposed. Not only tariffs, but the country's security responsibilities and defense commitments themselves may be reduced or withdrawn. Elbridge Colby's security strategy, which I analyzed previously, also identified China containment as the top priority, which aligns with the interim National Security Strategic Guidance published in the Washington Post in late March. All of this is within the same context.

This can be seen in the same context. At the time, Elbridge Colby stated that China containment was the top priority, referring to it as the 'baseline threat and baseline scenario.' He said that since the US would focus on containing China, allies would have to take responsibility for their own security. Steve Miran's report and statements, as well as the content emerging from the Trump administration, are in the same vein. What should South Korea prepare for? I wish my analysis were incorrect, but as discussions on the alliance with South Korea, cost-sharing, and economic issues intensify, the Trump administration has not yet seriously engaged in containing China in the Indo-Pacific region. However, there is a possibility that they will do so in earnest soon, and for this purpose, they may ask the US allies in the Indo-Pacific region, essentially South Korea, one of the few key countries, the following question:

These elements serve as criteria for determining tariff burdens or cost-sharing. The other half concerns security. For instance, a criterion is whether a country sides with China or Russia in major international disputes. It also includes security issues such as whether a country supports or hinders U.S. security efforts in various regions. The administration intends to evaluate these security issues in conjunction with economic matters. Therefore, while our side has successfully argued that the current tariff issues and defense cost-sharing issues are proceeding separately, we must remain prepared, keeping in mind the high likelihood that they could be reintegrated at any time.

Linking Cost-Sharing Demands with China Containment Strategy

"To what extent will you participate in containing China?" Depending on that level, everything, including economic issues, i.e., tariffs, defense cost-sharing issues, and the role of US Forces Korea, could be determined. I truly wish my analysis were incorrect, but based on my analysis of the US Trump administration's interim National Security Strategic Guidance, Steve Miran's reports and statements, and Treasury Secretary Steven Mnuchin's remarks, this is how it reads. Therefore, we need to prepare for this.

The worst-case scenario is if we cannot actively participate in containing China. In that case, the US might respond by saying, "Alright, then you will pay tariffs, and we can no longer guarantee our commitment to defending South Korea as before." This is also mentioned in Elbridge Colby's book. The book describes South Korea as a country in a fluid situation with an unclear position regarding its participation in China containment. Although Colby later shows a favorable stance towards South Korea, it remains uncertain what will happen from the perspective of actual US national interest.

South Korea's Preparedness: Potential Changes in Alliance Relations Based on the Level of Participation in China Containment

Therefore, based on my analysis so far, it is highly probable that the Trump administration will link economy and security and demand this from allies, including South Korea, with the core issue being China containment. This is a very concerning situation. Thank you for watching.

■ Park Won-gon: Director of the Center for North Korean Studies, East Asia Institute; Professor of North Korean Studies, Ewha Womans University.

■ Management and Editing: Park Han-soo, EAI Research Fellow
Inquiries: 02-2277-1683 (ext. 204) | hspark@eai.or.kr

Therefore, based on my analysis thus far, the Trump administration is likely to link economic and security issues when making demands on allies, including South Korea, with the core objective being the containment of China. This is a highly concerning situation. Thank you for watching.

■ Park Won-gon_Director, North Korea Research Center, East Asia Institute. Professor, Department of North Korean Studies, Ewha Womans University.

■ Management and Editing: Park Han-soo_EAI Research Fellow
Inquiries: 02-2277-1683 (ext. 204) | hspark@eai.or.kr