Seoul: Collaboration in major trade issues with neighboring countries like Japan and Taiwan can be a viable option for South Korea to navigate the impact of U.S. President Donald Trump's aggressive tariff policies, including larger-than-expected country-specific reciprocal tariffs, former Trade Minister Yeo Han-koo has said.
According to Yonhap News Agency, Yeo, now a senior fellow at the Peterson Institute for International Economics in Washington, D.C., emphasized that the tariffs are part of Trump's strategy to secure trade concessions, reduce trade deficits and attract corporate investment. "The U.S. wants to improve trade imbalances and bring in foreign investment by pressuring countries with high tariffs," Yeo said. "So I think these reciprocal tariffs are negotiable. What matters is whether each country offers enough concessions."
Last week, Trump announced plans to impose a minimum 10 percent baseline tariff on all imports to the United States and country-specific reciprocal tariffs, which include 25 percent duties for South Korea. Taiwan faces a 32 percent reciprocal tariff on goods entering the U.S. and Japan has 24 percent. The reciprocal tariff scheme is set to take effect Wednesday. Apart from the reciprocal tariffs, separate 25 percent tariffs on all car imports took effect on Thursday, affecting particularly South Korea and Japan. Trump is also set to soon announce sectoral tariffs on semiconductors, a crucial export item for both South Korea and Taiwan.
In light of these developments, Yeo proposed that South Korea lead a regional coalition, involving Japan and Taiwan, to jointly participate in the U.S. Alaska liquefied natural gas (LNG) project, a key agenda of the Trump administration. The potential participation in the estimated US$44 billion project has been considered a prominent bargaining chip for South Korea in tariff negotiations as increasing imports of Alaskan gas could help reduce the country's trade surplus with the U.S. Yeo noted that both Japan and Taiwan have expressed interest in the massive project, which involves building pipelines across Alaska to export gas to Asia.
Given its scale and economic challenges, he suggested a joint venture approach may be more workable than any single country pursuing it alone. "This project is not easy to make economically feasible in the current situation," he said, adding that yearslong efforts for the project have made little progress. "Rather than one country taking on the entire project, a few countries can team up to elaborate a plan together and join the U.S."
As another way to strengthen economic ties with Japan, Yeo also recommended joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a multinational free trade agreement that currently involves 11 nations, including Japan, Britain, Singapore, Australia, New Zealand, Canada, Mexico and Vietnam. "Japan's economy is more than twice the size of South Korea's, but both countries face similar challenges like aging population and slowing domestic demand," he said. "In the context of growing U.S.-China tensions, expanding our market through the CPTPP and working with Japan could be a strategic move."