Korea pushes back against US tariff demands

President Lee Jae Myung speaks during a town hall meeting held in Chuncheon city, Gangwon Province, Friday. Joint Press Corps

Korea is pushing back against mounting U.S. pressure to sign a contentious bilateral trade deal, saying it will not accept "unfair" negotiations, after a senior U.S. official warned that Seoul must sign or face steep tariffs.

“We will not hold negotiations that lack rationality or fairness. The government will proceed with talks with the national interest as the top priority,” a presidential office official said Friday.

The remarks come after U.S. Commerce Secretary Howard Lutnick warned that Korea should either accept the trade deal or pay tariffs during an interview with CNBC earlier this week, underscoring the impasse in monthslong talks.

Lutnick stressed that Washington’s position was firm, noting that South Korean President Lee Jae Myung’s Aug. 25 summit with U.S. President Donald Trump in Washington produced no trade announcement.

U.S. Secretary of Commerce Howard Lutnik looks on during a meeting between Korean President Lee Jae Myung and U.S. President Donald Trump at the Oval Office in the White House in Washington, D.C., Aug. 25. UPI-Yonhap

“The Koreans didn’t sign when the president was in,” Lutnick said during the interview.

“You remember that he came to the White House. Notice how we didn’t talk about trade because he didn’t sign the piece of paper,” he said. “The Koreans either accept that deal or pay the tariffs. Black and white. Pay the tariffs or accept the deal,” he added.

At stake is a bilateral framework agreement reached at the end of July under which Washington pledged to reduce proposed tariffs on Korean goods from 25 percent to 15 percent. In return, Seoul would commit to invest $350 billion in the United States, along with other pledges, including Korean conglomerates’ direct investment in the country. But the two sides remain deadlocked over the structure of the investment package, profit-sharing and enforcement mechanisms.

Failure to finalize the deal would mean Korea faces a 25 percent tariff on automobiles — 10 percent higher than Japan’s rate, putting Korean automakers at a disadvantage in the U.S. market.

Detainees are made to stand against a bus before being handcuffed during a raid by federal agents in which 475 people, including around 300 South Koreans, were arrested at the site of a $4.3 billion battery plant project by Hyundai Motor and LG Energy Solution in Ellabell, Ga., Sept. 4 (local time). Reuters-Yonhap

The trade friction has deepened following a U.S. immigration raid that rounded up some 300 Koreans in early September at a Georgia construction site for a Hyundai-LG Energy Solution battery plant. Most of the Koreans arrested had entered the U.S. on the Electronic System for Travel Authorization (ESTA) or B-1 business visas, a common workaround for Korean firms facing difficulties obtaining H-1B skilled worker visas. However, both ESTA and B-1 visas prohibit receiving a U.S.-based salary, among other restrictions.

In a separate media interview, Lutnick said Korea should have reached out to him regarding the visa issue, while emphasizing that the current stopgap practice must change.

“Get the right visa and if you’re having problems getting the right visa, call me. I’ll call [Homeland Security Secretary] Kristi Noem. We’ll help you get the right visa, but don’t do it the wrong way. Donald Trump requires you to do it correctly.”

What's Korea’s next move in tariff standoff?

The standoff has stirred debate among Korean trade and international relations experts.

One trade specialist, speaking on the condition of anonymity to The Korea Times, argued Friday that the government must resist rushing into an agreement that could severely strain the economy.

“Paying for a 15 percent tariff reduction by financing a $350 billion U.S. investment fund, plus an additional $150 billion in direct corporate investment, is far beyond what Korea’s economy can reasonably justify. The government should not rush into signing, but instead pursue a win-win solution with the U.S., even if it takes more time,” the expert noted.

Containers are stacked at Pyeongtaek-Dangjin Port in Gyeonggi Province, Sept. 7. Yonhap

Others contend that Korea must move to secure binding commitments from Washington, ensuring predictability for businesses and strengthening credibility in bilateral relations.

“We need to start establishing binding principles with the U.S. by signing and clearly defining the scope and use of investments,” Choi Won-mog, a law professor at Ewha Womans University and an expert on international trade, told The Korea Times. “That way, Korean businesses gain predictability and protection from future tariff hikes under shifting trade balances.”

He cautioned that without such a binding agreement, Washington could exploit trade imbalances to reimpose tariffs on an annual basis, further destabilizing Korean exporters.

Citing a recent ruling by the U.S. Court of Appeals for the Federal Circuit — which found that the International Emergency Economic Powers Act does not authorize the president to impose sweeping tariffs on nearly all imports — Choi acknowledged that the Supreme Court could ultimately annul the bilateral tariff agreement in future legal challenges. Still, he argued, Korea could prepare by including safeguards, such as provisions for tariff refunds if U.S. courts strike down the measures.

Vehicles for export are lined up at Pyeongtaek-Dangjin Port in Gyeonggi Province, Sept. 7. Yonhap

The international trade expert also emphasized that visa issues should be part of the negotiations and formalized in writing, warning that sidestepping U.S. demands would not avert consequences, as further pressure is bound to follow.

“Korea needs to concede on some key elements that are considered deal-breakers, because rejecting them outright would collapse the talks,” he said.

“But instead of yielding piece by piece, we should have bundled issues together — such as creating quotas or categories for professional visas, freezing defense cost-sharing or addressing nuclear reprocessing rights. That would have advanced our national interest. By merely dodging U.S. proposals without counteroffers, and by leaning too heavily on the Japanese model, Korea is being dragged along and ending up where Trump wants us to be," the professor said, adding that Korea’s circumstances are very different from Japan’s.

He further argued that the challenge is not about finding a temporary fix, but about establishing binding promises and principles between Seoul and Washington.

“Only then can we establish predictability and a firm basis for our commitments. If we respond on a case-by-case basis, we risk being dragged along by the other side’s shifting demands and rules. In the end, we may gain nothing at all, so we must be cautious,” the professor warned.

Choi also underscored that “Trumpism” in trade policy is expected to outlast Trump’s presidency. Pointing to the global environment shaped by the U.S.-China rivalry, the economic situation in the U.S. and the political demands of swing and red states, he said a return to pre-Trump globalization is unlikely anytime soon.

“Trump-style reciprocal tariffs will not be temporary. They will likely continue for the next 20 years,” he said. “This is not a short-term problem. Only by building binding, credible commitments and principles with the U.S. can we give Korean businesses the predictability they need,” he said.

A view of the Hyundai Motor-LG Energy Solution battery plant construction site in Ellabell, Ga. Since the Department of Homeland Security’s immigration raid on Sept. 4 (local time), construction has been completely halted. Yonhap

Meanwhile, construction of the Hyundai-LG Energy Solution battery plant in Ellabell, Georgia, is expected to be delayed by several months following the U.S. immigration raid.

Hyundai Motor CEO Jose Munoz told Bloomberg that the raid’s impact would push back the project timeline. “This is going to give us a minimum two to three months’ delay, because now all these people want to get back. Then you need to see how you can fill those positions. And for the most part, those people are not in the U.S.,” he was quoted as saying.