SEOUL — Because the Trump administration has been churning out commerce threats this week, South Korea, a vital buying and selling companion 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 “firm but not 100% firm,” relying on what commerce companions may supply.
But it surely’s unclear whether or not the extra three weeks might be sufficient to resolve the longstanding disagreements between Washington and Seoul. One of many largest factors of competition is South Korea’s auto business, which was the third largest exporter of vehicles to the U.S. final 12 months.
Though White Home Press Secretary Karoline Leavitt stated Monday that Trump’s cellphone was ringing “off the hook from world leaders all the time who are begging him to come 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 Drive 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 difficult to say for certain that we can finish [the trade talks] by July 8.”
“Both sides are doing their best and we need to come up with an outcome that can be mutually beneficial to both parties, but we still have not yet been able to clearly establish what each party wants,” 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 speed up the negotiations and find a landing 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.Okay. and Vietnam.
However the Lee administration has maintained a notice of warning. At a high-level assembly held Tuesday to debate the present state of the negotiations, Lee’s presidential chief of employees for coverage, Kim Yong-beom, reportedly emphasised the “national interest” over speedy dealmaking, instructing officers to assist tariff-affected industries and “diversify” South Korea’s export markets.
Beneath a decades-long free commerce settlement, South Korean tariffs on most U.S. items are already zero, that means there are fewer concessions Seoul can supply, analysts say. And on the important thing factors of competition reminiscent of vehicles, there’s little daylight to be discovered.
“This announcement will send a chilling message to others,” Wendy Cutler, vp of the Washington-based Asia Society Coverage Institute and former deputy U.S. commerce negotiator, stated in a submit on X.
Trump’s letter additionally recommended that the U.S. will “not be open to reprieves” from sectoral tariffs, together with these on vehicles, Cutler added.
South Korean commerce officers have careworn that eradicating or considerably decreasing the 25% tariffs on vehicles 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 vehicles from Hyundai and Kia issue considerably into the $66-billion commerce deficit that Trump has decried as unfair. Final 12 months, South Korea was the third largest exporter of vehicles to the US, to the tune of $34.7 billion. It purchased $2.1 billion value of vehicles from the U.S.
Till now, the nation’s flagship automakers Hyundai and Kia have been capable of sidestep any main tariff shocks, attaining as a substitute report gross sales within the first half of the 12 months by promoting present stock within the U.S.
However many imagine it is just a matter of time till they must increase automobile sticker costs, as some opponents have finished. Each corporations’ working income at the moment are forecasted to hit double-digit declines in contrast with the earlier 12 months.
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 heart 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 without doubt one of the few closely protected items in South Korea’s commerce relationships. Beneath its free commerce settlement with the US, 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 via 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 providers — on the grounds that it may reveal delicate navy websites which can be important for protection in opposition to North Korea. Final 12 months, 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 a lot of money, and they’re very good. They’re very good, but, you know, they should be paying for their own military,” Trump stated at a White Home Cupboard assembly on Tuesday, including that he instructed South Korea it ought to pay $10 billion a 12 months.
Over a four-year interval from 2016 via 2019, the entire value of sustaining U.S. troops in South Korea was $19.2 billion, or round $4.8 billion a 12 months, based on a 2021 report from the U.S. Authorities Accountability Workplace. Over that interval, South Korea footed about 30% of the entire annual prices, along with offering oblique monetary assist reminiscent of waived taxes or foregone rents.
Beneath the Particular Measures Settlement, the joint framework that governs this association, Seoul’s funds have grown over time. Beneath the newest model, which covers 2026 to 2030, Seoul’s annual contribution starting subsequent 12 months might 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 Special Measures Agreement (SMA) guarantees stable conditions for U.S. troops stationed in Korea and strengthens the joint South Korea – U.S. defense 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 government will adhere to the 12th SMA, which was agreed upon and implemented in a legitimate manner.”
