2025 KDI-CIER Seminar:
Tariffs, Global Supply Chain Restructuring, and Policy Responses

On 26 August, the Korea Development Institute hosted the 2025 KDI–CIER Seminar. The theme of this year’s seminar was “Tariffs, Global Supply Chain Restructuring, and Policy Responses.” Since the signing of the KDI–CIER MOU in 2023, the seminar has been conducted on a regular basis, thereby facilitating collaboration between the two leading think tanks of Korea and Taiwan to discuss the transformation of the global trade order and explore policy responses.

In welcoming remarks, KDI President Dongchul Cho emphasized that the theme for this year is both timely and meaningful. He noted that trade policies and the U.S.–China trade conflict are reshaping global supply chains, which is creating significant challenges as well as new opportunities for Korea and Taiwan. He expressed his hope that the seminar would provide insights for building more resilient economic structures. President Hsien-Ming Lien of CIER also noted the positive cooperation between the two institutes. He said, “This seminar is a chance for us to share what we have been doing and what we have learned, and I hope it will help us work together more closely in the future.”
 

The seminar featured four presentations examining the U.S.–China trade conflict and its spillover effects from different perspectives.

KDI Senior Fellow Yeongkwan Song analyzed the Trump administration’s tariff policies. He explained that their "Reciprocal Tariffs," intended to boost U.S. manufacturing and reduce trade deficits, in fact disrupted global supply chains, triggered retaliatory tariffs, and increased financial market volatility. He also noted that Korea’s trade policy now faces new challenges, including shifts in trade and investment patterns, growing dependence on critical minerals, and the need to recalibrate its FTA strategy.

Shu-Fei Yang, a CIER Fellow, explained how U.S. tariffs have reshaped Taiwan’s trade structure. Since 2018, Taiwanese companies have accelerated reshoring and adopted “China+1” strategies, which led to a sharp increase in ICT exports to the United States. As a result, Taiwan’s trade surplus with the U.S. rose by 385% in 2024. She also pointed out that potential Reciprocal Tariffs and national security tariffs under Section 232 could become major challenges for Taiwan’s export industries, particularly in semiconductors, servers, and networking equipment.

KDI Fellow Heehyun Lim presented an empirical analysis of the heterogeneous impacts of the U.S.–China trade war on Korean industries. Her study found that while Korea as a whole benefited from U.S. tariffs on China, the impacts differed markedly across sectors. Capital-intensive and export-oriented industries expanded their gains by leveraging economies of scale and global networks, whereas other sectors experienced only limited or even negative effects. Based on these findings, she further emphasized the need for tailored policy support, stronger export infrastructure, and greater capital investment to enhance industrial resilience against external shocks.

Finally, CIER Fellow Chun-Yen Wu analyzed both the direct trade diversion and indirect supply chain reallocation effects of the U.S.–China trade war on Taiwan’s international trade. His analysis indicated that tariff shocks contributed not only to an increase in Taiwan’s direct exports to the United States but also to the expansion of indirect exports routed through third countries such as Vietnam and Mexico, underscoring a rerouting effect rather than a complete decoupling. He further highlighted that exports of electronic components and machinery are shifting to new assembly hubs, demonstrating the restructuring of global value chains (GVCs).

The seminar underscored the significance of Korea and Taiwan sharing the common challenges posed by the U.S.–China trade conflict, while also presenting complementary perspectives grounded in their respective policy research capacities. Moving forward, both KDI and CIER reaffirmed their commitment to consolidating the foundation for cooperation by advancing joint research and academic exchanges in response to the evolving global trade environment.

 Written by. Wanhee Jeon, Research Associate, Research Outcome Dissemination Unit, 044-550-4442, whjeon@kdi.re.kr