▲Attorney Kim Seon-young of Sejong Law Firm

IRA abolition is impossible… $7,500 payment provision for electric vehicle purchases can be nullified
Unemployment caused by the transition to an eco-friendly industry and the reliance on China for key battery minerals

Experts agree that even if former President Trump wins the upcoming US presidential election, it is highly unlikely that the IRA will be immediately abolished, but the trend toward electric vehicles could be somewhat delayed.

In addition, the presenters that day agreed that it is very important to prepare a scenario to respond to the fact that one of the two candidates, current President Biden or Trump, is expected to be elected as the next president, and the two men's policy directions are polar opposites in many areas except for containing China.

The Korea Chamber of Commerce and Industry (hereinafter referred to as the KCCI) held the 'Korea-US Trade Forum: US Presidential Election Trade Policy and Supply Chain Response Strategies' on the 18th at the KCCI International Conference Hall to compare the trade policy pledges of each US presidential candidate and seek new supply chain response strategies.

Attorney Kim Seon-yeong of Sejong Law Firm gave a presentation on the 'IRA outlook and response measures for the Korean battery industry' on the same day, and said that even if Trump is elected president, it would be impossible to nullify the IRA (Inflation Reduction Act) itself, but it would be possible to delete the provision providing a $7,500 purchase subsidy. />
The common opinion of the speakers that day, including attorney Kim Seon-young, is that in order to abolish the IRA, numerous procedures must be followed, including passage by the National Assembly, public hearings, and discussions, and that Trump will not proceed with all of these.

Attorney Kim Sun-young said that instead of repealing the IRA itself, Trump could nullify the provision that provides consumers with $7,500 by eliminating or changing one provision through Selective Repeal.

There are other methods available, including executive orders, the Congressional Review Act (CRA) that can reject approval of new regulations, and replacing agency heads.

Trump has been a consistent and public attacker of environmental policies during his presidency, and has worked tirelessly to overturn environmental laws enacted by former President Obama.

Trump attempted to deregulate 77 environmental provisions, but the Democratic Party's strong opposition led to a battle in the courts, and in reality, no more than 40 provisions were deregulated.

As part of his campaign pledges, Trump is still promising to eliminate subsidies related to electric vehicles, so it seems likely that he will attempt to do so in various ways. However, it is impossible for President Trump to stop the global trend of switching to electric vehicles alone, and it is highly likely that he will compromise as it could also cause confusion in the U.S. auto industry, according to attorney Kim Seon-yeong.

However, Trump's anti-environmental policy attempt itself could pose a risk to our country's battery and electric vehicle industries, so it would be important to follow the actions of American auto companies and show solidarity, he said.

Next, attorney Park Joo-hyun of Yulchon Law Firm, who took the stage as a presenter, gave a presentation on 'Environmental Policy and the Electric Vehicle Industry's Response Strategy', and said that what candidate Trump is restraining is not the electric vehicle itself, but the process of transitioning to an eco-friendly industry.The unemployment rate and initial costs that inevitably arise in the country, as well as the dependence on China for key battery minerals, were cited.

▲ Attorney Park Joo-hyun of Yulchon Law Firm

Candidate Trump's policy direction, as mentioned above, can be seen in Agenda 47.

Agenda 47 includes: △ increasing domestic energy production in the U.S. to reduce unit costs; △ slowing down the Biden administration's electric vehicle policy.

Trump is promising to take on Biden's Green New Deal policies head-on, claiming they are non-market and costly and would revive the use of fossil fuels.

This is interpreted as meaning that it will contain China and revive the traditional automobile industry, and it is gaining support from labor unions.

Attorney Park Joo-hyun emphasized that the core of the Trump camp's energy policy is 'reducing energy unit prices.'

The goal is to reduce the cost of energy supply, which will allow factories to operate more cheaply, thereby increasing employment, improving product productivity, and securing a middle class, thereby turning the U.S. economy into a goldmine again.

Attorney Park Joo-hyun said that if Trump is elected, expanding the supply of hybrid cars, which are currently showing a clear sales increase trend, could be a way to cushion the impact, and diversifying sales channels to regions such as Europe that are friendly to electric vehicles could also be an alternative.

Meanwhile, Woo Tae-hee, executive vice chairman of the Korea Chamber of Commerce and Industry, said in his opening remarks, “I believe that companies and businesspeople will be very interested in the U.S. presidential election to be held in November.” He added, “Last year, out of the $72.8 billion in overseas investment, $30 billion was in the U.S., so the importance of investment in the U.S. is very great. It is important to prepare response strategies for each scenario.”

▲ Woo Tae-hee, Executive Vice Chairman of the Korea Chamber of Commerce and Industry

One thing that our country will be sensitive to in response to the results of this US presidential election is electric vehicles.

He presented the connection between the IRA and electric vehicle batteries and what the implications would be if former President Trump wins the 2024 presidential election.

IRA stands for Inflation Reduction Act, and the purpose of IRA is literally to reduce inflation, and another purpose is to contain China.

To reduce inflation, we either have to raise taxes or cut spending.

The United States has set out to reduce national health care costs by reducing spending, and has chosen to reduce greenhouse gases (setting a goal of a 40% reduction by 2030) to create a clean environment as a means of implementing this.

This has led to an expansion of electric vehicles and the revitalization of the battery industry.

The IRA attracted battery manufacturers to the United States by requiring subsidies only for electric vehicle batteries manufactured in the United States, and also by supplying key minerals and components that go into battery manufacturing. It has established itself as a strong trade policy to contain China, with a provision requiring that products be clearly marked as made in China.

China has over 50% of the processing of raw materials such as lithium, cobalt, and graphite, as well as battery cells, and with sales of 9.6 million electric vehicles projected to reach 2040 in the U.S., the IRA's goal is to bring these sectors back to the U.S. so that China will no longer be able to fatten its own coffers.

Countries including ours have invested a significant amount of money in building factories to respond to the IRA, but production in the United States is not smooth due to the Made in USA battery requirement.

The cost of battery materials and labor produced in the United States is very high, and American component manufacturers are unable to keep up with demand, which takes a long time and only increases total costs, resulting in some companies ceasing manufacturing.

Attorney Park Jeong-hyeon of Gwangjang Law Firm said in a statement that day that various situations that followed former President Trump's election served as a backdrop to the strengthening of the U.S. economic security policy.

With the election of former President Donald Trump, the importance of economic security in U.S. economic, trade, and industrial policies began to be highlighted under the expression “economic security is national security.”

The subsequent coronavirus pandemic raised concerns about the high level of interdependence in global supply chains, as well as the potential for weaponization.

Then came the war that started with Russia's invasion of Ukraine and the geopolitical crisis such as the Gaza Strip, which led to a recognition that the safety of supply chains is more important than economic efficiency from a national security perspective.

The U.S. economic security measures initially took the form of individual policy measures such as import regulations and export controls, but gradually evolved into a broader approach such as supply chain reorganization and industrial policy.Is doing.

As the Biden administration takes office, its economic policies are increasingly centered on industrial policies such as subsidies for reorganizing the supply chain centered on the United States in advanced technologies such as semiconductors and AI, and strengthening investment restrictions to prevent technology outflows.

The purpose of economic security that the United States is trying to achieve through these measures is analyzed to be to widen the technological gap as a superpower and solidify its overwhelming superiority in economic and defense capabilities.

Attorney Park Jeong-hyeon emphasized, “Regardless of the outcome of the November presidential election, the containment policy toward China is likely to be maintained or strengthened,” adding, “If you have a field in China or procure raw materials from China, you may be directly affected, so you should prepare for the possibility of increased economic security measures against China.”

He continued, “On the other hand, if we are in a competitive relationship with China, it can act as an opportunity to some extent, so we should actively seek ways to secure more competitiveness by taking advantage of such opportunities.”