How should Korea negotiate with Trump over trade?
For over half a century, exports, especially of advanced products, have been a core driver of the Korean economic engine, and the U.S. market was a key destination for those exports.
However, with his “Liberation Day” tariffs, U.S. President Donald Trump threatens to change all that. Even with the recent U.S. court decision limiting Trump’s ability to impose tariffs, Korea is not yet out of the woods. The administration can still impose tariffs using Sections 232 and 301 and will almost surely go down this path.
So, why is Trump doing this and how should Korea respond?
The first thing to realize is that there is a method to the president's “madness.” This is not just Trump playing power politics or randomly attacking countries. Korean policy makers are at their peril if they do not understand Trump’s motivation, even if they don’t agree with it.
It’s not that prior U.S. presidents were unconcerned with large U.S. trade deficits and unfair foreign trade practices. But they felt constrained to respond through the World Trade Organization, and since the WTO is flaccid at best, they accomplished little. Needless to say, Trump feels no constraints to acting unilaterally.
Second, they prioritized maintaining America’s role as the defender of global order and democracy, which meant largely turning a blind eye to other nation’s trade and economic distortions in order to keep them in the U.S.-led “tent.” Trump believes the United States was played as a “sucker” by other nations and that it is time to put America first.
And finally, none of them — even former President Joe Biden — really focused on closing the massive U.S. goods trade deficit, which was almost $920 billion in 2024.
As such, when it comes to trade, the Trumpians hold five key beliefs.
First, trade deficits equal a loss of wealth. For Trump, “tariffs are about making America rich again.”
Second, all goods-producing sectors are created equal. A low-tech company that casts hammers is no less important than a high-tech one that makes 3-nanometer semiconductors.
Third, “friend” and “foe” are the same. The only thing that matters is the extent to which the administration believes a nation is taking advantage of America. That is why it can propose 25 percent tariffs on imports from Korea, but just 10 percent on Iran.
Fourth, America must be self-sufficient. Trumpian protectionists refuse to accept a world in which America does not make everything it needs.
Fifth, global markets are nice, but not necessary. The Trumpians reject the idea that some industries, particularly those advanced industries, need global markets to thrive. In their view, the U.S. economy is big enough to enable firms to succeed.
So what should Korean President Lee Jae Myung and his administration do? First, they can't put their heads in the sand and hope this goes away. It won’t. While it’s not possible to know if Trump is willing to do the “art of the deal” with Korea, policymakers should assume he will and offer him a deal he can chalk up as a win.
First on the agenda must be reducing the $66 billion trade deficit in goods. One way to do this is to continue to encourage Korean companies to open factories in the United States, as many have already committed to do. It’s better for these companies and the Korean economy to at least be able to sell in the United States from U.S. factories than to be shut out of the U.S. market completely.
In addition, buy more American oil, coal and minerals, and farm products, including beef, pork and soybeans. This won’t reduce Korea’s global market share in critically important advanced industries like semiconductors and electronics, but it will help satisfy Trump. At the same time, tell Korean Air to buy Boeing airplanes, not Airbus. Likewise, open Korea’s legal services market to U.S. firms.
Second, address the low hanging fruit that are clear irritants to the Trump administration. Many of these are in the digital policy category, including the ban on Google's access to high-resolution maps — something I experienced recently in Seoul — along with limits on U.S. cloud computing in government procurement and limits of moving data outside of Korea.
They should also tell U.S. trade negotiators that Korea will stop network usage fees (where companies like Netflix subsidize Korean internet service providers), stop aggressive competition policy enforcement from the Korea Fair Trade Commission against U.S. internet platforms (including rejecting the General Assembly’s platform regulation bill) and end discrimination against U.S. pharmaceutical and agricultural biotech companies. Many of these are highly visible irritants in the Trump administration and Congress, as the new Korean Digital Trade Enforcement Act reflects.
At the end of the day, these concessions should be easy to offer up in negotiations as getting rid of them would do little to hurt the global competitiveness of Korean advanced industry firms.
Koreans may protest that we signed the U.S.-Korea Free Trade Agreement and even renegotiated it under the first Trump administration. Why do we have to do all this? But as they say in America, “that and a nickel will get you a cup of coffee.” For Trump, it’s a new world and Lee needs to treat it as such and negotiate a deal that preserves Korean market access to America by making real concessions on what at the end of the day are relatively minor things for Korean economic competitiveness. After that, hope for the best.
Dr. Robert D. Atkinson (@RobAtkinsonITIF) is the president of the Information Technology and Innovation Foundation, an independent, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy. The views expressed in the above article are those of the author and do not reflect the editorial direction of The Korea Times.