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.
US tariff tantrum fuels push for closer Korea-Japan economic ties
President Lee Jae Myung shakes hands with Japan's Prime Minister Shigeru Ishiba during their summit on the sidelines of the G7 summit in Kananaskis, Canada, June 18. Yonhap
By Nam Hyun-woo
Calls are growing for Korea to strengthen economic ties with Japan as a strategic buffer against trade risks stemming from the Donald Trump administration’s unpredictable tariff policies, with both Seoul and Tokyo facing challenges in their ongoing negotiations with Washington.
Some experts propose that Seoul expedite its effort to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), among other measures. The CPTPP, a Japan-led multinational trade pact, functions as a high-standard free trade agreement among its member nations.
On Tuesday, Trump told reporters that he is “not sure we’re going to make a deal” with Japan, and he will write Japan a letter saying "you'll pay a (tariff rate of) 30 percent, 35 percent or whatever the number is that we determine.”
The remark followed seven rounds of ministerial-level trade talks between the U.S. and Japan. According to the Financial Times, Japan is gradually acknowledging that exempting auto tariffs will be impossible, but is still demanding assurances that any deal with the U.S. will be final and not followed by further tariff increases.
So far, Washington has not issued Korea messages as strong as those to Japan, but Seoul also faces a growing list of demands from the U.S. During a press conference on Thursday, President Lee Jae Myung said the ongoing trade talks “should produce mutually beneficial results,” but noted that “both sides have yet to clearly define what they want from each other.”
U.S. President Donald Trump shakes hands with Japan's Prime Minister Shigeru Ishiba at the White House in Washington, Feb. 7. Reuters-Yonhap
Against this backdrop, calls are mounting that Korea should buffer tariff risks by strengthening economic partnership with Japan.
In a report published on Tuesday, Chung Sung-hoon, a senior fellow of the Korea Development Institute, urged Korea to expand trade agreements with countries other than the U.S. and China and accelerate its efforts to join the CPTPP.
“The CPTPP is a trade pact among 12 member countries excluding the U.S. and China and promotes a high level of market openness that can help reduce Korea’s reliance on U.S. and Chinese trade while stabilizing supply chains,” Chung said.
Currently, Korea and Japan are members of the Regional Comprehensive Economic Partnership (RCEP), but the pact offers limited market openness, eliminating tariffs on only about 90 percent of goods and allowing numerous exceptions for sensitive items.
The Korean government has been reviewing the possibility of joining the CPTPP for several years, but has yet to submit a formal application. Under the previous Yoon Suk Yeol administration, the country sought to pursue membership, but the process was suspended due to strong opposition from farmers and fishers.
In addition to the CPTPP, several lawmakers from the ruling Democratic Party of Korea have recently requested the state-run Korea Institute for International Economic Policy (KIEP) to draft a report on the feasibility of a Korea-Japan free trade agreement. The two countries’ combined nominal GDP stands at $5.98 trillion — making it the third largest in the world after the United States and China — underscoring the potential for significant economic growth.
Another idea for Korea-Japan economic partnership is the formation of a bilateral economic coalition, proposed by Korea Chamber of Commerce and Industry Chairman Chey Tae-won.
Chey suggested that Korea and Japan form an economic bloc similar to the European Union as a new growth model, a proposal that has received a positive response from Lee.
“From the perspective of either Korea or Japan, strengthening economic cooperation with China or pursuing trilateral economic ties with China may carry political burdens,” said Heo Jai-chul, head of the Japan and East Asia Team at the KIEP.
“But relying solely on the U.S. comes with risks and uncertainties, so deepening Korea-Japan economic cooperation could create synergy, especially given their similar industrial strengths.”