[Editorial] Democrats Certain to Win U.S. Midterms; Korea Must Devise Economic and Security Measures

With vote counting underway in the U.S. midterm elections, the Democrats’ chances of gaining control of both the House and Senate are growing. If they take control of both chambers, the Trump administration will be weakened, bringing changes to global financial markets and international relations. South Korea, a U.S. ally and major economic partner, could also be affected in terms of both security and the economy.
At this point, the areas in which South Korea is expected to feel an impact are semiconductor exports and ongoing investment in the U.S. As the vote count has increasingly favored the Democrats, analyses have emerged of the economic impact on South Korea, including one economic expert’s forecast of weaker semiconductor demand and possible changes to investment agreements with the U.S.
Tom Orlik, chief economist at Bloomberg Economics, put the odds of the Democrats taking control of the House at 90% or higher and the Senate at 70% or higher. He said that, for South Korea, U.S. state governments’ regulation of data center construction could become a factor for the semiconductor industry. Concerns among voters about rising electricity and water bills could lead to constraints on construction, he said.
He added, however, that projects already under construction would not be affected, and that the risk would be to future orders and profitability rather than existing orders for Korean semiconductors. He explained that South Korea and Taiwan could suffer significant damage if U.S. stock prices fell 20% and capital spending on data centers were suspended for a year.
On investment in the U.S., he forecast that the Democrats could scrutinize more strictly the U.S. government’s acquisition of stakes in private companies and investment agreements with foreign companies. He expected pressure on Korean and Taiwanese semiconductor companies to expand their investment in the U.S. to continue.
If the Democrats become the majority party, there will be things that work against us and things that work in our favor. Any change in the Trump administration’s pressure on investment in the U.S.—which is putting our government in a difficult position—would not be to our disadvantage. Semiconductor exports, however, are a different matter, given the boom they are currently enjoying. Investment in and development of artificial intelligence (AI) will continue, but if their pace slows because of data center construction and other factors, exports will inevitably lose momentum.
We must keep a close eye on changes in the U.S. Congress and prepare a tailored strategy in case the Democrats win a majority of seats. The administration will not have changed, however, so the range of scenarios will inevitably become more complex. We should analyze clashes between the U.S. administration and Congress and their consequences, then respond as circumstances unfold.
As always, our national interest must be the yardstick for our decisions. There is no guarantee that a Congress controlled by the Democrats will necessarily be on South Korea’s side. Republicans and Democrats alike are part of the U.S. Congress and administration.
The same goes for security, not just the economy. We should not assume that a Democratic-controlled Congress will change its stance simply because the Republican Party appears to be driving a wedge into relations with allies. Whichever political party controls the administration and Congress, it will ultimately put U.S. national interests first, just as we do. We can only hope for changes that benefit us.