US cancels high-level tariff talks with Korea as top security official fails to meet counterpart

Deputy Prime Minister and Finance Minister Koo Yun-cheol, third from left, leaves Incheon International Airport without taking a flight to Washington, Thursday, as the U.S. cancels high-level tariff discussions with Korea involving him. Joint Press Corps

The so-called "two-plus-two" high-level tariff discussions between Korea and the United States scheduled for Friday were canceled just one day before the meeting was to take place in Washington, with the U.S. citing an urgent schedule change for Treasury Secretary Scott Bessent.

National Security Adviser Wi Sung-lac, who had arrived in Washington earlier this week, was also unable to meet his counterpart, Secretary of State and acting National Security Adviser Marco Rubio, as Wi said Rubio "had to skip their planned meeting as U.S. President Donald Trump suddenly summoned him."

Despite the U.S. officials' explanation of "sudden" and "urgent" issues, these incidents are sparking concerns of complications in the negotiations over the 25 percent "reciprocal" tariff which the U.S. plans to levy on Korean products. They also make the chances of reaching a deal before the planned implementation of the tariffs on Aug. 1 slimmer.

The Ministry of Economy and Finance said Thursday morning that the meetings between finance and trade ministers of the two nations were postponed.

The U.S. notified Korea of the cancellation by email about an hour before Deputy Prime Minister and Finance Minister Koo Yun-cheol's scheduled departure, causing him to return to his office from Incheon International Airport. Koo had originally planned to attend a meeting with Trade Minister Yeo Han-koo to talk with Bessent and U.S. Trade Representative Jamieson Greer.

"The U.S. side asked to hold the meeting in the near future, so both sides will arrange the meeting as soon as possible," a finance ministry spokesperson said.

The ministry said the U.S. side did not give details about the secretary's schedule change.

While speculation grew regarding the cancellation, the Korean Embassy in Washington ruled out any hidden U.S. intentions behind it.

Two-plus-two meetings have not been held since April, when negotiators from the previous Korean administration planned to pursue a "July package." An agreement was not reached before the U.S. announced that Korea would be subject to a 25 percent tariff starting Aug. 1.

Although Koo is not joining the negotiations, Yeo arrived in the U.S. capital, Tuesday (local time). Industry Minister Kim Jung-kwan is also in Washington to meet his counterparts, including U.S. Commerce Secretary Howard Lutnick and Energy Secretary Chris Wright.

"Both Kim and Yeo are meeting U.S. government officials as planned," the Ministry of Trade, Industry and Energy said in a press release.

The setback in the talks came after Japan, one of Korea's chief rivals in the U.S. automotive and industrial markets, succeeded the previous day in lowering auto and other tariffs to 15 percent in return for increasing U.S. rice imports and investing $550 billion in U.S. industries, including an Alaskan natural gas development project.

Korean carmakers, still subject to the 25 percent item-specific tariff, now fear they will lose U.S. market share to Japanese competitors unless Seoul strikes a deal with Washington before Aug. 1.

Prior to the cancellation of Friday's high-level talks, however, rumors circulated that Seoul had decided not to discuss larger-scale purchases of U.S. rice or imports of U.S. beef from cattle over 30 months of age, despite Washington's demands.

President Lee Jae Myung shakes hands with Hyundai Motor Group Executive Chair Chung Euisun during a dinner at the presidential residence in Seoul, July 14. Courtesy of presidential office

Instead, the government reportedly plans to propose more than $100 billion in combined U.S. investments by Korean companies. President Lee Jae Myung has also been holding a series of private meetings this month with leaders of major conglomerates, including Samsung, SK, Hyundai Motor, LG and Hanwha, in apparent attempts to ask them to make larger investments in the U.S.

Bloomberg, citing sources familiar with the issue, reported that Lutnick suggested a $400 billion investment target in talks with Korea, presenting it as a way to secure a reduction in U.S. tariffs on Korean automobiles.

However, Trump said Wednesday that he will only lower tariffs if a country agrees to open its markets, warning of "much higher tariffs" on countries that refuse.

In the meantime, Wi returned to Seoul on Thursday afternoon after a three-day stay in Washington to discuss a "package deal" covering tariffs and defense costs.

Wi confirmed that he was unable to have a face-to-face meeting with Rubio, but said he had a phone conversation with him the next day instead, where Rubio apologized for being unable to attend the meeting.

Wi said he met several other U.S. government officials, including Lutnick and Greer, to discuss security and economic affairs.

"The negotiations between Korea and the U.S. are in the last, important stage," Wi said at Incheon airport on his return. "Officials in the economy-related ministries are having talks in various sectors in Washington. At this stage, my visit was to have a comprehensive talk on overall Korea-U.S. relations, ranging from trade to security and the alliance."

The main opposition People Power Party expressed concern about Korea lagging behind Japan in trade talks.

"While pressuring companies to invest in the U.S. in order to secure a tariff deal, the government is discouraging them with tougher labor rules and higher taxes just to fulfill its populist pledges," the conservative party said in a statement.