Tuesday, November 5, 2024

South Korea Weighs Buying More US Oil and Gas If Trump Wins

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(Bloomberg) — South Korea is considering a plan to boost energy imports from the US if Donald Trump wins the election and steps up pressure on trade partners, according to people familiar with the matter.

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Officials in Seoul have spent months preparing for a Trump or Kamala Harris presidency, with greater risks expected for their trade-reliant country if Trump prevails, said the people, who asked not to be identified as discussions are private.

A key area under scrutiny is South Korea’s increasing trade surplus with America. The South Korean government may urge companies to boost their purchases of US oil and gas if the trade imbalance becomes a sticking point under a Trump presidency, according to the people. Other countries that run large trade surpluses with the US include China and Mexico.

The US election on Tuesday is shaping up to be a tight race between Trump and Vice President Harris. Policymakers around the world are trying to game out what a potential second term for Trump could mean for Washington’s foreign policy, especially since he has vowed to impose a minimum 10% tariff on all imports and increase tariffs on Chinese goods to as much as 60%.

South Korea is a key player in semiconductor manufacturing, making its cooperation important for US export control efforts against China. At the same time, Seoul depends on the presence of US troops to deter North Korea, which is strengthening its ties with Russia and sending troops to support Moscow in its war against Ukraine. North Korea fired a suspected ballistic missile early Tuesday.

Officials in Seoul have been holding meetings with businesses and think tanks in recent weeks to discuss post-US election strategies. After Trump started his previous term, South Korea rushed to find ways to boost energy purchases from the US, according to two people familiar with the matter.

The government could approach major oil importers and ask them to raise their share of US purchases, although this doesn’t always result in the expected increase, the people said. This time, geopolitical risks in the Middle East might provide extra incentive for companies to turn to the US for imports, they added.

The Asian nation relies heavily on imports for almost all of its energy needs and is home to one of the largest refinery clusters in the world. So far this year, about 11% of its gas imports and 17% of its oil imports have come from the US. SK Innovation Co. and GS Caltex Corp. are among the biggest importers.

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