February 17, 2025
SEOUL – The United States plans to map out new tariff levels for its trading partners based on these other countries’ tariffs, nontariff barriers and other trade-related policies in a way that will effectively break the established global trade rules, and South Korea is likely to face an uphill battle in securing a better position in its new trade relations with the US.
On Thursday, US President Donald Trump asked his advisers to devise new “reciprocal” tariff levels that reflect an array of factors, including tariffs, taxes, subsidies, exchange rates and other trade practices involving US products.
Trump said the move is designed to deal with “unfair” relations the US has with other countries, but experts are concerned that his new tariff policy will tear apart decadeslong tariff-setting practices based on negotiations through international bodies like the World Trade Organization.
Notably, Trump threatened to impose the new tariffs on all US trading partners without exceptions or waivers. But the US administration’s study on the new tariffs, scheduled to be completed by April 1, means governments around the world are expected to scramble in the next two weeks to strike better deals with the US.
There is no doubt that South Korea is an easy target for the Trump administration. Last year, the country logged a trade surplus of $55.7 billion with the US, a figure that will encourage US negotiators to demand more concessions from Asia’s fourth-largest economy.
On Friday, Trump also announced that his new tariffs on imported cars will be unveiled on April 2, a plan that could deal a blow to South Korea’s automotive industry. Last year, the US market was the destination for nearly half of South Korea’s car exports, and Korean carmakers have not paid tariffs on exports to the US thanks to a bilateral free trade agreement.
The auto tariff plan came after Trump announced the US would impose 25 percent tariffs on steel and aluminum imports beginning March 12. Other key export items for Korea, like semiconductors, are also likely to be hit by higher trade barriers initiated by Trump.
Some officials and experts in South Korea earlier said they expected that the country would largely avoid the onslaught of higher US tariffs due to the South Korea-US free trade agreement, which allows for 98 percent of bilateral trade items to be exempt from tariffs. But Trump’s reciprocal tariffs, to be based on comprehensive factors, shattered such optimism.
To pave the way for better negotiation terms, the Korean government is now trying to better communicate its position to US officials. On Saturday, Foreign Minister Cho Tae-yul met with US Secretary of State Marco Rubio on the margins of the Munich Security Conference in Germany.
Rubio reportedly expressed his confidence in South Korea’s acting President Choi Sang-mok and welcomed the country’s efforts to boost bilateral collaboration in the shipbuilding, semiconductor and energy sectors.
Given that Trump has yet to speak with Choi on the phone, much less arrange an in-person meeting, Rubio’s comments signal that South Korea still has a chance to discuss cooperative trade relations by focusing on the mutually beneficial role it can play.
South Korea must devote its full diplomatic and economic resources to secure effective negotiations with Washington before the reworked tariffs take effect. One fact to stress is that South Korea reinvested an average of 96.2 percent of its trade surplus with the US back into the American economy from 2017-2020.
Aside from the dispute over Trump’s reciprocal tariffs, South Korea must identify every opportunity to stress its economic and strategic value to the US in a bid to mitigate the negative impact.