Korea's negotiations on the U.S. tariffs ran into a hurdle as President Donald Trump said that a 25 percent tariff would be imposed on Korean imports in a letter addressed to President Lee Jae Myung.
It's an unfortunate development, coming just as Korean negotiators were working headlong to not just delay the start of so-called reciprocal tariffs, set for Wednesday, but also to exempt or reduce item-specific ones such as the 25 percent import taxes already imposed on cars, steel and car parts. There is a particularly mortifying element in Trump imposing these tariffs on Seoul, a decadeslong partner with Washington and a free trade partner whose leading firms have made significant direct investments in the U.S. Japan, another regional U.S. ally, received a nearly identical letter.
Ironically, Trump provided a reprieve for the Korean negotiators by extending the tariff deadline to Aug. 1 through an executive order detailing when the changes take effect. He demonstrated his unconventional methods in trade negotiations, using his social media platform to announce the letters sent to specific nations and unilaterally setting the rates himself. It's a chilling reminder of the volatile and uncertain nature of negotiations under this U.S. president.
These are new waters that Korea must traverse, a departure from past trade negotiations. Korean negotiators must sharpen their strategy by determining which demands they can work with, making counteroffers and promising cooperation in key manufacturing sectors, such as shipbuilding, semiconductors and batteries, to minimize impacts on Korea's mainstay export items of semiconductors and cars. The negotiators must also take a clear stance on the issue of defense costs, another area where Trump has expressed discontent.
The Korean trade ministry said as much in a statement issued Tuesday, noting that it will use this as an opportunity to "improve domestic systems and regulations to deal with the trade deficit that is a major interest of the United States and further develop core industries through a manufacturing renaissance partnership between the two countries." Seoul should also remind the U.S. that it imposes virtually no import tariffs under the Korea-U.S. Free Trade Agreement.
Seoul must also work on setting a date for summit talks between Lee and Trump. There has been a seeming mismatch in schedules between the two leaders, as onlookers wonder if other issues are standing in the way. Trump made an early exit from the G7 summit held in Alberta, Canada, skipping an expected meeting with Lee, and U.S. Secretary of State Marco Rubio's canceled trip to Seoul has been interpreted as a discouraging sign for bilateral ties. Lee's national security adviser Wi Sung-lac who has now met with Rubio in Washington, said he has proposed a Lee-Trump summit talk.
We need to see more aggressive diplomatic engagement from Lee, who in his first 30 days in office has enjoyed immense popularity with an over 60 percent approval rating for his thorough and systematic workstyle. Lee would do well to use this directness in international affairs.
The continuing volatility and uncertainty is unnerving, as the U.S. warily views the rise of China, its trade imbalances with other nations and the decline of its own manufacturing industries. Still, traditional alliances are an important pillar, even in this new landscape. Wendy Cutler, vice president of the Asia Society Policy Institute, said to Reuters that both Japan and Korea "have been close partners on economic security matters and have a lot to offer the United States on priority matters like shipbuilding, semiconductors, critical minerals and energy cooperation."
The U.S. should remember the strengths of the alliance, even as the geopolitical landscape and economic realities shift towards transactional relationships. Not only is Korea fulfilling its responsibilities for the alliance, the Korean economy makes it an attractive partner for continued cooperation. Both Seoul and Washington should work on negotiations that will produce reciprocal benefits and uphold mutual interests.