By Shanker Singham
When Americans think of trade wars, they usually envision shipping containers sitting idle in ports, steep tariffs dominating the news cycle, and diplomatic standoffs over agricultural quotas. But the architecture of global protectionism has profoundly evolved. Today, the most damaging barriers to American prosperity are rarely erected at customs checkpoints. Instead, they are quietly engineered within foreign regulatory agencies, cloaked in the bureaucratic and seemingly benign language of “fairness,” “market balance,” and “precautionary antitrust.”
Right now, one of America’s closest geopolitical and economic allies, the Republic of Korea, is offering a masterclass in this new breed of behind-the-border protectionism, and its poised to become a cause a state-level economic crisis in the U.S.
The Korea Fair Trade Commission (KFTC), under the leadership of Chairman Ju Biung-ghi, is aggressively advancing a legislative framework broadly known as the “Online Platform Fairness Act.” Ostensibly modeled on Europe’s rigid ex-ante digital regulations, the legislation abandons decades of traditional, effects-based antitrust enforcement. Instead, it seeks to proactively hobble the digital ecosystems that define the modern global economy.
In other words, Korea is already an increasingly unfriendly place for U.S. companies to do business – especially tech companies like Google, Meta, Netflix, Coupang and others. Korea’s looming regulations will make that environment even worse. Our latest economic modeling at the Competere Foundation demonstrates it will cost Main Street America roughly half a trillion in losses over the next decade. That equates to billions in losses across all 50 states. For states that have a larger tech sector presence, like Washington, California, Texas and New York, the impact will be even more acute.
For policymakers in Washington D.C., and particularly for state governors and local representatives across the country, this might initially look like a niche dispute over foreign competition theory. It is not. As our latest research shows, Korea’s regulatory drift is an Anti-Competitive Market Distortion (ACMD) of historic proportions. It is a targeted, asymmetrical assault on U.S. technology leadership.
Crucially, this macroeconomic damage will not be absorbed evenly. The burden of Korea’s digital protectionism will fall heavily and disproportionately on specific U.S. states. It will hollow out local economies, suppress regional job growth, and act as an invisible, regressive tax on ordinary American families. It is time for state and federal lawmakers alike to recognize foreign technology regulation for what it has become: a localized economic crisis that demands immediate action.
The Hypocrisy of “Precautionary Antitrust”
To understand the severity of this threat, we first must recognize the underlying mechanics and glaring hypocrisy of the KFTC’s approach. The proposed legislation has been strictly and intentionally scoped to target the online platform sector. Unsurprisingly, this is a space overwhelmingly pioneered, developed, and dominated by U.S. innovators such as Google, Apple, Meta, and Uber.
Under the guise of the Fairness Act, the KFTC is seeking to subject these American tech companies to draconian oversight and the constant threat of structurally disruptive fines. The rationale? Engaging in business practices that are universally accepted as pro-competitive and efficiency-enhancing everywhere else in the world.
Yet, while Seoul hyper-focuses its regulatory apparatus on foreign digital platforms, it turns a remarkably blind eye to the deeply entrenched monopolies operating within its own borders. Over the past several years, the KFTC has actively fostered market concentration for its domestic chaebols (large industrial conglomerates). The agency cleared mega-mergers that created near-monopolies in the aviation sector (Korean Air-Asiana) and the automotive space (Hyundai-Kia). Simultaneously, it permits a handful of domestic conglomerates to passively control nearly 90 percent of the Korean retail and telecommunications sectors. Furthermore, Chinese technology competitors—often heavily subsidized and shielded by the Chinese Communist Party—are largely given a free pass to operate without the same scrutiny.
This is not a neutral application of the law designed to maximize consumer welfare. It is industrial policy disguised as antitrust enforcement. By leveraging domestic regulations specifically to handicap foreign entrants and artificially construct barriers to entry, Seoul is borrowing directly from the mercantilist playbook typically associated with the Chinese economic model.
It has not gone unnoticed by US policymakers that Chinese tech firms have been spared this, even as the government grows ever close to Chairman Xi’s Chinese Communist Party.
From Abstract Distortions to Concrete State Losses
For decades, apologists for foreign protectionism have argued that non-tariff barriers, domestic regulations, and antitrust enforcement actions are simply too abstract to be quantified in hard-nosed trade negotiations. Under this theory, foreign regulations are a matter of internal “domestic sovereignty” and should be left off the table during serious bilateral talks.
Our data entirely dismantles this argument. Economic distortions are highly quantifiable, and their ripple effects are devastatingly real.
At the Competere Foundation, we utilize our proprietary ACMD productivity model to measure the precise drag these policies create on economic output. A functioning market relies on three core pillars: strong Property Rights, robust Domestic Competition, and open International Competition. Korea’s proposed legislation severely degrades all three. When we analyzed the “vicious circle” of Korea’s interventionist antitrust enforcement combined with its proposed ex-ante platform regulations, we calculated a staggering cost: a $525 billion drag on the U.S. economy over a ten-year period.
But an aggregate national figure of $525 billion, while massive, can be difficult to conceptualize. For a local mayor, a state senator, or a regional business leader, national GDP figures often feel disconnected from the day-to-day realities of their constituents. To truly understand the threat of these foreign regulations, we must look at how this economic loss is transmitted across the American landscape.
The U.S. economy is highly integrated. When a foreign government adopts rules that weaken voluntary exchange, reduce market access, or impose discriminatory compliance costs on U.S. firms, the harm does not magically stop at the corporate headquarters in Silicon Valley. It cascades through the economy via lost productivity, reduced capital investment, fractured digital supply chains, and lower long-run income growth.
The State Tech Exposure Coefficient: Mapping the Invisible Tax
To measure this localized impact, the Competere Foundation developed an addendum to our primary research, creating a framework to allocate the national economic loss directly across state economies. We went a step further by introducing the State Tech Exposure Coefficient (STEC).
The STEC acts as a critical multiplier. It scales the baseline GDP per capita loss up or down based on how heavily a given state’s economy relies on the digital and technology sector relative to the national average. Because the U.S. national average for the technology sector’s share of the economy is approximately 9.3 percent, states with a technology footprint larger than 9.3 percent experience a mathematically enhanced economic drag.
When we apply the STEC to the $525 billion national loss, the localized devastation becomes impossible to ignore. Korea’s digital policies are effectively levying a massive, invisible tariff on America’s most dynamic regional economies:
- Washington State: Washington boasts a technology footprint that comprises roughly 21.5 percent of its gross state product, yielding a high STEC multiplier of 2.31. Because of its intense reliance on cloud computing, software development, and global e-commerce, Washington will absorb a deeply disproportionate hit. The state faces a projected $27.4 billion economic drag. On a human level, this equates to a staggering wealth extraction of more than $3,500 for every single resident in the state over the next decade.
- California: As the undisputed epicenter of American digital innovation, California’s economy faces an outsized and existential threat. Over the next ten years, the state stands to lose over $123 billion in gross state product. This is not merely a loss of corporate valuation; this is capital that would otherwise fund local startups, generate high-paying engineering jobs, and support the broader service economy in regions stretching from the Bay Area to Silicon Beach.
- Texas: Texas has aggressively and successfully positioned itself as a business-friendly haven for tech expansion, drawing massive investments, corporate relocations, and talent to cities like Austin and Dallas. But this rapid growth makes the state uniquely vulnerable to foreign digital protectionism. Texas faces a projected artificial wealth drain of $48.7 billion over the next ten years.
- New York and Beyond: Traditional economic powerhouses are firmly in the crosshairs. Driven by the intersection of finance, media, and digital platforms, New York projects a massive economic extraction of $33.9 billion. Virginia, heavily reliant on tech infrastructure and data centers, faces an $18.2 billion loss. Even states like Massachusetts ($16.2 billion), Florida ($24 billion), and Illinois ($17.3 billion) will suffer massive, multi-billion dollar hits to their market potential.
The map below illustrates the different states and costs associated with the Korean policy for those states.
