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Why are US and South Korea in a trade deadlock?
The deadlock started in July when South Korea refused to pay upfront on a US$350 billion investment package linked to trade deals. Seoul is concerned about economic stability and fears US demands for control could destabilize their economy. The US, meanwhile, is pushing for sector-specific tariffs to reshape supply chains, leading to stalled negotiations.
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What is the US$350 billion investment package about?
The US and South Korea agreed to a massive investment package aimed at boosting trade and economic cooperation. However, South Korea is hesitant to commit funds upfront due to concerns over US control and potential financial risks, especially without safeguards like currency swaps. This hesitation has contributed to the ongoing deadlock.
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How do US tariffs impact Southeast Asia?
US tariffs on Southeast Asia and pharmaceuticals are affecting regional growth and supply chains. These tariffs are part of the US strategy to reshape global trade, which can lead to disruptions for ASEAN economies that rely on regional trade and manufacturing. The tensions also influence regional diplomatic relations.
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What does this mean for global supply chains?
The escalating trade tensions threaten to disrupt global supply chains, especially in sectors like semiconductors and medicines. Companies worldwide could face delays and increased costs as tariffs and trade restrictions complicate international trade routes. This situation adds uncertainty to the global economy.
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Could this lead to a financial crisis?
Seoul's reluctance to pay upfront on the investment package raises fears of a financial crisis if negotiations collapse. Without safeguards, there is concern that the economic instability could spill over into broader markets, affecting investors and economies worldwide.
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What are the regional implications of US trade policies?
US tariffs and trade strategies are impacting not just South Korea but also neighboring countries like Australia and ASEAN nations. These policies can lead to shifts in regional alliances, economic vulnerabilities, and changes in trade flows, influencing the stability of the Asia-Pacific region.