The court’s decision marks a potential conclusion to one of the most turbulent political chapters in South Korea’s recent history. The next leader will be tasked with handling a slew of challenges, including contending with Donald Trump’s escalated global tariff campaign and dealing with a more emboldened North Korea.
In December, Yoon declared martial law, the first such order in South Korea in over 40 years. He retracted the decree hours later after lawmakers voted it down, and the president was suspended from duties days later after parliament impeached him.Yoon’s political gamble plunged South Korea into its worst constitutional crisis in decades, leaving the export-reliant nation without clear policy direction as Trump marched into a new stage in his tariff campaign. Prime Minister Han Duck-soo is currently acting President.
Yoon has denied any wrongdoing and said the martial law decree was aimed at stopping the main opposition Democratic Party from paralyzing his administration. He now faces pending results of his criminal trial over the martial law decree, a process that has been ongoing independently of the Constitutional Court case.
Opposition leader Lee narrowly lost to Yoon in the 2022 presidential election. A landslide win for the Democratic Party in the April parliamentary elections gave him a strong tailwind for another run for the presidency.Under Lee, the Democratic Party has been looking to increase taxes on wealthy individuals and the chaebol conglomerates that dominate the country’s corporate landscape. He touts a more conciliatory approach to relations with North Korea, which might align with Trump if the US leader seeks to revive diplomacy with North Korean leader Kim Jong Un.
Lee is more cautious about taking a hard line on China and pursuing closer relations with Japan, which could make coordination among the US and its regional allies more challenging.
Other potential candidates to succeed Yoon include Kim Moon-soo, a labor minister in Yoon’s cabinet, and Oh Se-hoon, the mayor of Seoul.
Whoever wins the presidential election, they will be inheriting an economy that faces multiple risks ahead. Trump’s unprecedented decision to slap tariffs across the world hit South Korea harder than most, especially among the US’s security allies.
The White House is set to impose 25% tariffs on South Korea across the board from April 9, and has already implemented high levies on cars, steel and aluminum. Trump’s escalated tariffs and plans to bring more production back to the US pose a risk to a range of South Korean companies deeply embedded in global supply chains, including Samsung Electronics Co., and automakers such as Hyundai Motor Co.
South Korea’s exports lost growth momentum in February, as demand for semiconductors weakened and chip shipments marked their first decline since late 2023. Semiconductors are South Korea’s biggest driver of earnings from abroad, and a key component of everything from consumer electronics to AI.
Yoon’s martial law decree has also battered consumer confidence in South Korea. The central bank has been downgrading its economic forecasts for this year to account for the likely hits to growth, while also cutting its benchmark interest rate to try and shore up the economy.
