Seoul: Facing U.S. President Donald Trump's imminent sweeping tariff scheme and mounting pressure on a range of industries and the economy, South Korea needs to boost its imports of American energy and highlight room for cooperation in areas crucial to the U.S. as leverage in possible negotiations, experts said Thursday.
According to Yonhap News Agency, South Korea has been scrambling to seek tariff exemptions amid concerns about the impact of Trump's new tariffs on its trade-resilient economy, as the U.S. plans to impose 25 percent tariffs on all steel and aluminum imports starting Wednesday. Washington has moved to introduce "reciprocal" tariffs next month to match duties that other countries impose on U.S. exports. It is also planning to roll out tariffs on cars, semiconductors, and pharmaceuticals -- major export items for South Korea.
In his address to a joint session of Congress on Tuesday, Trump argued that South Korea's average tariff is four times higher than that of the U.S., despite the U.S. providing "so much help militarily and in so many other ways to South Korea." The Seoul government has refuted the claim, stating that the average tariff rate on American imports stood at 0.79 percent as of last year under the bilateral free trade agreement (FTA) between Seoul and Washington.
Given the Trump administration's discontent with the U.S.' trade deficit with South Korea, the Seoul government is advised to take steps to address the short-term trade imbalance, according to experts. "We can also buy more energy, semiconductor equipment, aircraft and military items from the U.S. We need to emphasize that the Seoul government is working hard to address these trade surplus issues," said Jang Sang-sik, a KITA official.
South Korea's trade surplus with the U.S. reached a record high of $55.69 billion in 2024, marking the largest surplus among America's major trading partners for the second consecutive year. Regarding the CHIPS and Science Act, experts called for efforts to ensure that South Korean companies follow through on investment pledges, which would help reduce the U.S. trade deficit and create more jobs.
Samsung Electronics Co., SK hynix Inc. and other companies have expanded investments in the U.S. and are set to receive grants. However, Trump has called for repealing the CHIPS and Science Act, calling it "horrible." "The U.S. trade deficit is expected to decrease once South Korean companies begin operating manufacturing facilities they are building in the U.S. and increase production there," said Han Ah-reum, a KITA researcher.
Additionally, experts suggest strengthening bilateral cooperation in sectors where the U.S. has long-term interests, such as the shipbuilding industry, which can serve as a valuable negotiating tool and help ease trade pressure. Also drawing attention is Seoul's possible participation in a massive natural gas pipeline development project in Alaska. Trump stated that South Korea, Japan, and other nations wanted to partner with the U.S. in its project in Alaska, making "trillions of dollars each."
Seoul's industry ministry has expressed interest in the project and will set up a working-level group to review the details. "If we have no other choice but to participate in the project, we should devise measures to maximize our interests," said Oh Seong-ik, an official from the Regional Development Policy Committee under the Organization for Economic Cooperation and Development (OECD).
South Korea's central bank has stressed the need for flexibility in negotiations with Washington. "Given the high uncertainties regarding the U.S. tariff policy, South Korea needs to explore new markets that can replace the U.S. while taking an active stance and exercising flexibility in tariff talks," the Bank of Korea said in a report released last week. The BOK has warned that the intensifying global trade conflict caused by Trump's tariff plan could lower South Korea's economic growth projection.