The United States is expected to ramp up protectionist trade policies going forward, which could pose challenges for South Korea, the central bank here said Sunday.
Asia's fourth largest economy is forecasting 3 percent expansion for 2018, following a solid growth rate of 3.1 percent last year. The growth estimate is based on expectations that a global economic recovery will fuel greater trade.
The latest Bank of Korea (BOK) economic focus report said that last year Washington did not engage in overly aggressive measures to restrict trade, nor did it put China on its list of countries that manipulate its foreign exchange rates.
This year, however, with the U.S. midterm election set for late in the year, and policymakers expected to check numerous trade remedies rules that are up for review, the situation could become more complicated.
"The U.S. administration under President Donald Trump will likely strive to enforce 'fair trade' with its partners with emphasis on reducing the country's trade deficit," the central bank findings said.
The U.S. has bolted from the Trans-Pacific Partnership pact and made clear its intention to renegotiate the North American Free Trade Agreement.
Seoul and Washington already kicked off talks to revise their bilateral free trade pact, which went into effect in March 2012.
The BOK said that Washington has already started intensifying unfair trade probes to protect its industries and workers, which could cause complications for Seoul. The United States, along with China, is a key market for South Korean exports.
The central bank pointed out that the U.S. Department of Commerce has kicked off an investigation to determine if imported steel and aluminum products pose a risk to national security.
The world's largest economy, moreover, earlier this month formally approved safeguard measures on imported solar power cells and washing machines, the first time such action has been taken since 2001.
The central bank, meanwhile, said that while the U.S. is moving towards protectionism, the country is showing signs of solid growth fueled by exports and domestic consumption.(Yonhap News)