Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
KORUS FTA loses shine, but stays central in overcoming tariff threats
U.S. President Donald Trump disembarks Air Force One in West Palm Beach, Florida, March 28. Reuters-Yonhap
By Nam Hyun-woo
Korea may use US push for FTA revision as strategic leverage
With the Donald Trump administration implementing reciprocal tariffs on all countries, the fate of the Korea-U.S. Free Trade Agreement (KORUS FTA) is facing mounting questions, with experts expressing concerns that the new tariffs could significantly undermine its benefits.
However, experts said the trade pact serves as the foundational framework for trade between Seoul and Washington and an important tool for trade negotiations with the U.S., noting the likelihood that the Trump administration will demand a revision to the agreement
Washington on Wednesday (local time) imposed a 25 percent duty on all imports from Korea, with Trump listing the country on what he called the "worst offender" list.
Trade between Korea and the U.S. has been largely free from tariffs under the KORUS FTA, which took effect in 2012, but the Trump administration has argued that bilateral trade remains unfair.
Last year, Korea posted a record trade surplus of $55.7 billion with the United States. This increase is largely attributed to the expansion of intermediate goods exports, as more Korean companies established production facilities in the U.S.
Since the KORUS FTA serves as the foundation for bilateral trade, there had been optimism in Korea that the agreement might have shielded the country from retaliatory tariffs.
However, Trump bypassed the pact by invoking the International Emergency Economic Powers Act of 1977, which allows the president to unilaterally restrict economic activities with foreign entities if they are deemed a threat to national security.
Trump has been employing various provisions to bypass the free trade agreement. Last month, he invoked Section 232, which also allows tariffs on imports considered a threat to national security, to impose a 25 percent tariff on car imports.
As a result, Korean government officials assumed that the U.S. would impose tariffs regardless of the KORUS FTA, and are now in search for alternative ways to offset the impact through negotiations.
“The reciprocal tariff virtually sidelined the KORUS FTA by invoking national security,” said Lee Tae-kyu, a senior fellow at the Korea Economic Research Institute.
“However, this does not mean that the pact will no longer be in use," Lee said. "The KORUS FTA is the main framework of the two countries’ trade negotiations having established counterparts. There may be various types of negotiations in the face of the Trump administration’s tariff pressures, but talks within the pact’s framework will be much more advantageous for Korea than other channels.”
Former President Moon Jae-in, second from left, and U.S. President Donald Trump, third from left, sign the revision of the Korea-U.S. Free Trade Agreement at a hotel in New York, Sept. 25, 2018. On left and right are Korea's then-Minister of Trade Kim Hyun-chong and then-U.S. Trade Representative Robert Lighthizer, respectively. Yonhap
Unlike executive orders, which are signed unilaterally by the U.S. president and can affect bilateral trade, the KORUS FTA is a treaty forged through formal government-to-government negotiations. This provides Korea with a relatively equal footing in trade talks — at least in form, even if practical asymmetries remain.
Equal footing, according to Lee, is a critical factor. While the European Union, Canada and China are actively pushing back against Trump’s tariff pressures with threats of retaliatory measures, Korea is less able to do so due to its smaller economic scale and strategic relationship with Washington.
The KORUS FTA, as a comprehensive agreement spanning a wide range of industries, gives Korea room to negotiate trade-offs across sectors, allowing it to offset losses in one area with gains in another, and helping maintain a balance in overall national interest, Lee said.
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“It seems likely the U.S. will exert its influence to revise the KORUS FTA in the near future, given the precedent of the first Trump administration,” Lee said. “And we may use this as a tool for a balance in benefits in trade with the U.S.”
In April, 2017, Trump signed an executive order directing a comprehensive review of all U.S. trade agreements, including the KORUS FTA, and pressured Korea to renegotiate the pact. The two countries engaged in three rounds of negotiations in 2018 and implemented the revised agreement in 2019.
Image created with ChatGPT
“It is hard to rule out the likelihood of the U.S. demanding renegotiations for the KORUS FTA,” said Jang Sang-sik, head of the International Trade Research Institute at the Korea International Trade Association. “And Korea will have to ensure that any agreement reached through negotiations does not deviate from the fundamental framework of the current KORUS FTA.”
Citing the U.S. Trade Representative’s 2025 National Trade Estimate Report released on Monday (local time), Jang noted that most of the issues mentioned as barriers to trade in the report were far from critical. Most of the goods and services traded between the two countries are already under the current free trade scheme, meaning the U.S. may have limited gains even if it revises the current FTA.
“Even if renegotiations take place, there is little guarantee that American demands will lead to tangible improvements in U.S. goods’ market share or other conditions within the Korean market,” Jang said. “In the end, Korea may need to take a more defensive posture, offering limited concessions or accommodations through the framework of the KORUS FTA.”