Korea to hold trade talks with the US on Thursday; prudent response required
South Korea will hold "two plus two" trade consultations with the US in Washington on Thursday.
Finance Minister Choi Sang-mok and Trade Minister Ahn Duk-geun will lead the Seoul negotiation team, while US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will be in charge of the US side.
The possibility of US President Donald Trump choosing to get directly involved in the talks cannot be excluded. Last week, the US first held tariff talks with Japan at the White House, with Trump making a surprise attendance in the meeting. Trump is said to have demanded Tokyo pay more for stationing US troops in Japan, increase sales of US automobiles and reduce US trade deficit.
Trump exposed his intention to link tariffs to security. Washington will likely make similar demands of South Korea, which like Japan, greatly relies on the US for its security.
South Korea needs to brace for a scenario in which Trump inserts himself suddenly in the talks and mentions defense costs. As a presidential candidate, Trump called South Korea "a money machine" and said that Seoul's annual share of the costs of stationing US forces in Korea should increase ninefold to $10 billion. The US president has also touted a "one-stop shopping" approach, suggesting his intention to bundle tariff negotiations and defense cost sharing into a single package deal.
Trump's choice to get directly involved in negotiations points to his desire to quickly finalize a slew of trade deals as China responds strongly to US tariffs, financial markets become volatile, US recession risks rise and anti-Trump protests erupt.
Seoul and Washington already finalized a defense cost-sharing agreement for 2026 to 2030 in October last year. Tariffs are one thing and security another. South Korea reportedly plans to separate trade from security in negotiations with the US, but it is questionable whether the Trump administration will understand such a policy.
Seoul needs to show pan-governmental efforts to pursue a bilateral trade balance and remove non-tariff barriers. It should drive home its contributions to the US economy.
According to a lawmaker's analysis of data from the Korea International Trade Association and the Export-Import Bank of Korea, Korea's US investment amounted to 96.2 percent of its US trade surplus annually on average from 2017 to 2020. This can be regarded as reinvestment of trade surplus in the US. From 2021 to 2024, the reinvestment portion reached 71.4 percent.
In 2023, South Korea ranked first among foreign countries that created the most jobs in the US through direct investment. Seoul needs to use this data to persuade Washington on its contributions to the revival of American manufacturing. It should try to build up US trust by making progress on consultations about cooperation in shipbuilding and participation in a project to develop Alaska's natural gas resources.
The impact from the tariff war put the South Korean economy at risk of negative growth in the first quarter. Seoul urgently needs to get the tariff lowered, and yet it should not rush negotiations. It needs to meticulously examine cases of other countries as well. The outcomes of tariff negotiations will decide the direction of South Korea's export industries and domestic business. Prudent responses are required.
With less than a month and a half left till the June 3 presidential election, the government under acting President Han Duck-soo has little room for maneuver in trade negotiations. It is desirable to draw up the overall framework, reduce choice options and hand over points at issue to the next government so that it can settle them and sign a deal.
For now, it is best to persuade Washington to deal with trade and security separately, and focus on trade while putting off security talks until after the new government is inaugurated.
There are some headwinds from the tariff war Trump triggered. For South Korea, it has become important to keep its pace using the headwinds under US pressure to make achievements quickly.
