ED Seoul’s push on tariffs

President Lee Jae Myung approaches the podium to address the General Debate of the 80th session of the United Nations General Assembly at U.N. headquarters in New York, Sept. 23. Yonhap

President Lee Jae Myung has been active during his first U.N. General Assembly. He presented the “END” (exchange, normalization and denuclearization) approach to North Korea in his keynote speech, then presided over the U.N. Security Council debate Wednesday (local time), where he referenced artificial intelligence pioneer Geoffrey Hinton’s quote that AI is like a "tiger cub,” adding that it could become either a beast or a companion akin to Derpy from “KPop Demon Hunters.”

The president did not have an opportunity for a sit-down with U.S. President Donald Trump. Nevertheless, Lee did meet with U.S. Treasury Secretary Scott Bessent, where he drove home the point that Korea’s trade agreement with the United States should be “commercially rational” and must meet the interests of both countries.

It’s a message the president previously conveyed in pre-U.N. visit interviews conducted in Seoul. It should be noted that a meeting between a president and a treasury secretary does not align with diplomatic protocol, per se. Finance Minister Koo Yun-cheol later sat down separately for talks with his counterpart. But it is urgent for Korea to reach a tariff agreement, which the Trump administration must respect as allies and major trading partners.

Lee also told Time magazine that the $350 billion fund detailed in the agreement could be politically untenable and damaging for the economy under the conditions purportedly proposed by the U.S. administration, even stating that he could be impeached for it.

Korea and the United States reached an agreement in late July that the U.S. would impose a blanket tariff of 15 percent on Korean goods, lower than a previously threatened 25 percent, in exchange for Korea investing $350 billion in the United States. The two sides differ on how that investment should be implemented. The U.S. has reportedly been requesting a payment similar to Japan’s, where Washington can decide how and where Tokyo's $550 billion investment should be used. A similar arrangement would be much more challenging for Korea, which has a smaller foreign reserve than Japan.

In another interview with Reuters, Lee said that without a currency swap deal between Seoul and Washington, the U.S. investment demands could spark a financial crisis akin to the one in 1997.

Meanwhile, in an interview with Bloomberg, Prime Minister Kim Min-seok brought up the recent Georgia plant incident where more than 300 Korean nationals were detained, saying that Korean investment would be in limbo without resolving the visa issue that led to the raid.

All in all, Seoul is making a concerted push to pressure Washington so that its $350 billion investment can proceed on viable and rational terms that are mutually beneficial to the two countries. The current tariff burden is already being felt by Korean carmakers, who are subject to a 25 percent tariff in the absence of a signed trade agreement with the United States. They are now facing stiffer competition from their counterparts in Japan and Europe, whose auto export tariffs to the U.S. are set at 15 percent.

Still, top officials are playing it cool, saying negotiations won’t be tied to time pressure. However, Seoul is to play host to a major diplomatic event, the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in Gyeongju, North Gyeongsang Province, about a month from now. A neat wrap-up of trade negotiations around that time would enable further economic projects.

On the diplomatic front, Chinese President Xi Jinping is expected to attend the meeting, as well as Trump. Furthermore, North Korean leader Kim Jong-un has recently spoken of his “good memory” of Trump, signaling a potential thaw.

South Korea is an important ally and a major trade partner, a fact that should be acknowledged by the U.S. Bessent noted this during his meeting with Lee, saying the alliance remains strong enough to overcome any short-term differences. More internal and bilateral discussions should follow. When the two sides meet at the APEC summit in Gyeongju, hopefully there is a deal in place that can lead to further expansion and growth for both nations.