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Next 3 weeks critical in Korea's tariff talks with US
White House press secretary Karoline Leavitt holds a letter from U.S. President Donald Trump addressed to President Lee Jae Myung during a daily briefing in the Brady Briefing Room of the White House in Washington, Monday (local time). AFP-Yonhap
By Park Jae-hyuk
Seoul gets another pause on 25% 'reciprocal' tariffs
The next three weeks will be critical for Korea’s trade and economy, as the country seeks a tangible outcome in tariff talks with the United States after the Donald Trump administration delayed the start of the levy to Aug. 1.
Although Korea has avoided the immediate effect of the 25 percent “reciprocal” tariff, the government is set to accelerate its negotiations with the U.S. to reduce the tariff rate which, if applied as is, is expected to heavily weigh on Korea's export-reliant industries. Experts urge the Lee Jae Myung administration to persuade Washington by pledging to increase imports from the U.S.
The White House said Monday (local time) that Trump sent letters outlining each country’s tariff rates to the leaders of 14 nations, including Korea and Japan, both of which now face 25 percent “reciprocal” tariffs.
“Please understand that these Tariffs are necessary to correct the many years of Korea’s Tariff, and Non Tariff, Policies and Trade Barriers, causing these unsustainable Trade Deficits against the United States,” the letter addressed to Lee read.
However, the U.S. president also signaled room for negotiation, telling reporters later in the day that the rates are “not 100 percent firm.”
Regarding the planned tariff, Chang Sang-sik, head of the Institute for International Trade at the Korea International Trade Association, advised the Korean government to satisfy Trump by reducing Korea’s trade surplus with the U.S.
“With increased imports of energy and defense systems, the government should develop specific plans to boost imports of agricultural products, consumer goods and machinery,” he said. “Korea should also consider lowering nontariff barriers so Trump can claim achievements.”
Specific measures mentioned included buying more liquefied natural gas from Alaska and reconsidering plans to regulate monopolistic U.S. online platforms — two persistent demands from the U.S.
Mick Mulvaney, who served as chief of staff under the first Trump administration, also said last month that Korea should discuss energy imports from the U.S., as Trump has keen interest in the sector.
“He doesn’t want to give, give, give and he doesn’t want to take, take, take,” the former White House official said during a recent forum co-hosted by The Korea Times and the American Chamber of Commerce in Korea.
“Your trade delegation dealing with Trump should figure out how to do a deal where Trump gets something and gives something at the same time.”
But concerns are also rising over the Trump administration showing a firm stance toward Korea despite the Lee government’s concentrated efforts for negotiations since its inauguration on June 4. The letter had been sent when National Security Adviser Wi Sung-lac and Trade Minister Yeo Han-koo had been meeting their U.S. respective counterparts to explain Korea’s stance and situation.
Some raise skepticism about whether the U.S. can be convinced to exempt Korean cars and steel products from item-specific tariffs.
“Almost all of Korea’s tariffs are at zero for U.S. imports, leaving them with less to offer the U.S. than India or Vietnam with high tariffs,” Wendy Cutler, vice president of the Asia Society Policy Institute and former negotiator of the South Korea-U.S. Free Trade Agreement, said in her commentary. “This announcement is a chilling message to others. It suggests the U.S. will not be open to reprieves from the Section 232 sectoral tariffs, including on autos.”
Trade Minister Yeo Han-koo, right, talks with U.S. Secretary of Commerce Howard Lutnick in Washington, Monday (local time). Courtesy of Ministry of Trade, Industry and Energy
Amid ongoing uncertainty, Kim Yong-beom, presidential chief of staff for policy, convened an emergency meeting with relevant ministry officials.
Kim said the government has made utmost efforts to produce reciprocal outcomes through talks at various levels and meetings on diverse occasions since the new administration’s launch about a month ago, but did not have enough time.
But he also said protecting national interests is more important than immediate negotiation, according to a press release by the presidential office.
On Monday, Wi met U.S. National Security Advisor and Secretary of State Marco Rubio in Washington to discuss a potential summit between the two countries’ leaders, which Korea believes will help facilitate the tariff talks.
Yeo, who met U.S. Trade Representative Jamieson Greer in Washington on Saturday, also met U.S. Secretary of Commerce Howard Lutnick on Monday to again stress that exemptions or reductions in sectoral tariffs must be part of the final deal between the two countries.
The trade ministry also convened representatives from Hyundai Motor, POSCO and LG Energy Solution to an emergency meeting in Seoul on Tuesday to discuss countermeasures against Trump’s tariffs.