SEOUL — Because the Trump administration has been churning out commerce threats this week, South Korea, an important buying and selling associate and navy ally, has been struggling — like many — to navigate the uncertainty that looms over commerce negotiations with Washington.
On Monday, Trump despatched a letter dictating new tariff charges to 14 nations together with South Korea, which was hit with a 25% tax. The levies have been set to kick in Tuesday, however have been postponed to Aug. 1. Trump left the door open for one more extension, telling reporters the brand new deadline was “agency however not 100% agency,” relying on what commerce companions might supply.
Nevertheless it’s unclear whether or not the extra three weeks will likely be sufficient to resolve the longstanding disagreements between Washington and Seoul. One of many greatest factors of competition is South Korea’s auto trade, which was the third greatest exporter of cars to the U.S. final yr.
Though White Home Press Secretary Karoline Leavitt stated Monday that Trump’s telephone was ringing “off the hook from world leaders on a regular basis who’re begging him to come back to a deal,” the tone in Seoul has been reserved.
Commerce Secretary Howard Lutnick, left, walks throughout the tarmac on Sunday as President Trump boards Air Pressure One. On Monday, Trump dictated new tariff charges to 14 nations, together with a 25% tax on South Korea.
(Jacquelyn Martin / Related Press)
Final week, forward of the preliminary July 8 deadline, South Korean President Lee Jae Myung, who took workplace final month, stated “it’s tough to say for sure that we are able to end [the trade talks] by July 8.”
“Either side are doing their greatest and we have to provide you with an end result that may be mutually useful to each events, however we nonetheless haven’t but been in a position to clearly set up what every social gathering needs,” he added.
Since then, senior South Korean commerce officers have been dispatched to Washington with the hopes of bringing a deal inside putting distance.
“It’s time to hurry up the negotiations and discover a touchdown zone,” Commerce Minister Yeo Han-koo stated after assembly with U.S. Commerce Secretary Howard Lutnick on Monday.
Up to now, the one two nations which have struck new commerce offers with the Trump administration are the U.Ok. and Vietnam.
However the Lee administration has maintained a word of warning. At a high-level assembly held Tuesday to debate the present state of the negotiations, Lee’s presidential chief of workers for coverage, Kim Yong-beom, reportedly emphasised the “nationwide curiosity” over speedy dealmaking, instructing officers to assist tariff-affected industries and “diversify” South Korea’s export markets.
Underneath a decades-long free commerce settlement, South Korean tariffs on most U.S. items are already zero, which means there are fewer concessions Seoul can supply, analysts say. And on the important thing factors of competition comparable to cars, there’s little daylight to be discovered.
“This announcement will ship a chilling message to others,” Wendy Cutler, vice chairman of the Washington-based Asia Society Coverage Institute and former deputy U.S. commerce negotiator, stated in a put up on X.
Trump’s letter additionally prompt that the U.S. will “not be open to reprieves” from sectoral tariffs, together with these on cars, Cutler added.
South Korean commerce officers have confused that eradicating or considerably lowering the 25% tariffs on automobiles is a high precedence.
White Home Press Secretary Karoline Leavitt holds a commerce letter despatched by the White Home to South Korea throughout a information convention on Monday.
(Al Drago / Bloomberg by way of Getty Photos)
However South Korean automobiles from Hyundai and Kia issue considerably into the $66-billion commerce deficit that Trump has decried as unfair. Final yr, South Korea was the third greatest exporter of cars to america, to the tune of $34.7 billion. It purchased $2.1 billion value of automobiles from the U.S.
Till now, the nation’s flagship automakers Hyundai and Kia have been in a position to sidestep any main tariff shocks, reaching as an alternative document gross sales within the first half of the yr by promoting current stock within the U.S.
However many consider it’s only a matter of time till they must increase car sticker costs, as some opponents have carried out. Each firms’ working income are actually forecasted to hit double-digit declines in contrast with the earlier yr.
The U.S. has additionally reportedly demanded concessions that contact on delicate problems with meals or nationwide safety in South Korea — a far tougher promote to the general public than the expanded manufacturing cooperation that South Korea has sought to middle within the commerce talks.
Amongst these are opening up South Korea’s rice market to U.S. imports and permitting Google to export high-precision geographic knowledge to its servers outdoors of South Korea.
As an important crop that represents a good portion of farmers’ incomes, rice is among the few closely protected items in South Korea’s commerce relationships. Underneath its free commerce settlement with america, Seoul imposes a 5% tariff on U.S. rice as much as 132,304 tons, and 513% for something after that.
U.S. Military troopers attend a ceremony final month in Dongducheon, South Korea. A 2021 report from the U.S. Authorities Accountability Workplace discovered that it value $19.2 billion to keep up American troops in South Korea from 2016 by 2019.
(Kim Jae-Hwan / SOPA Photos by way of Getty Photos)
The South Korean authorities has lengthy denied Google’s requests to export high-precision geographic knowledge — which is used for the corporate’s map companies — on the grounds that it might reveal delicate navy websites which might be important for protection in opposition to North Korea. Final yr, Ukraine accused Google of exposing the areas of a few of its navy methods to Russia.
Equally vexing are Trump’s long-running calls for that Seoul ought to pay extra to host the some 28,500 U.S. troops stationed in South Korea.
“South Korea is making some huge cash, they usually’re superb. They’re superb, however, , they need to be paying for their very own navy,” Trump stated at a White Home Cupboard assembly on Tuesday, including that he advised South Korea it ought to pay $10 billion a yr.
Over a four-year interval from 2016 by 2019, the whole value of sustaining U.S. troops in South Korea was $19.2 billion, or round $4.8 billion a yr, in response to a 2021 report from the U.S. Authorities Accountability Workplace. Over that interval, South Korea footed about 30% of the whole annual prices, along with offering oblique monetary assist comparable to waived taxes or foregone rents.
Underneath the Particular Measures Settlement, the joint framework that governs this association, Seoul’s funds have grown over time. Underneath the most recent model, which covers 2026 to 2030, Seoul’s annual contribution starting subsequent yr will likely be $1.19 billion, an 8.3% improve from 2025, and can improve yearly thereafter.
Trump’s demand for practically 10 instances that — together with the threats that the U.S. would possibly pull its troops from the nation — has beforehand drawn widespread outrage within the nation, spurring calls by some for the event of South Korea’s personal nuclear arsenal.
“The Particular Measures Settlement (SMA) ensures secure situations for U.S. troops stationed in Korea and strengthens the joint South Korea – U.S. protection posture,” a spokesperson for South Korea’s Ministry of International Affairs stated in response to Trump’s feedback.
“Our stance is that the South Korean authorities will adhere to the twelfth SMA, which was agreed upon and carried out in a reputable method.”
