Tuesday August 5, 2025

News
 

South Korea Gets a Tariff Deal: Now What?

Alexander Eid

South Korea’s eleventh-hour tariff deal with the United States avoided the worst-case scenario for both sides – that is, a dramatic erosion of bilateral trade flows actuated by a 25% blanket tariff – but it did little to resolve the numerous points of tension weighing down the alliance. Despite multiple weeks of high intensity negotiations, critical economic and security issues remain unaddressed, meaning that elements of the U.S.-South Korea relationship will remain in flux until Seoul and Washington concretize the details of their newfound arrangement over the coming weeks and months.

On July 31, South Korea’s newly minted Foreign Minister Cho Hyun made his first official trip to the United States, marking the first step in this next phase of bilateral diplomacy. There he met U.S. Secretary of State Marco Rubio followed by key engagements with various White House officials and members of Congress to firm up what the immediate future of the U.S.-South Korea alliance will look like.

At the core of Cho’s mission undoubtedly sat the forthcoming summit between South Korean President Lee Jae Myung and U.S. President Donald Trump, a meeting the latter of which indicated would take place before August 14. Summits of this caliber take enormous time and effort, not to mention Lee’s busy schedule at home ahead of his approaching official inauguration on August 15 and the fact that this will be the South Korean leader’s first in-person engagement with Trump. Nevertheless, arranging and executing the summit as soon as possible will be critical in shaping the high-level parameters of the bilateral trade deal, including the broad direction of Seoul’s pledged USD 350 billion in U.S. investment and USD 100 billion in U.S. energy purchases. 

The summit will also offer an opportunity to address bilateral security ties, a perennial thorn in the Trump administration’s relationships with U.S. allies. Despite South Korean National Security Advisor Wi Sung-lac introducing security to the tariff conversation in early July – a move that I described at the time as a “risky play” for Seoul – the arrangement Trump announced on July 30 did not mention security. This is somewhat surprising given the litany of issues, from altering the mission of U.S. Forces Korea (USFK) in the name of “strategic flexibility” to South Korea’s indigenous development of nuclear weapons, that Trump and his officials have repeatedly broached with their South Korean counterparts. These proposed changes in the security relationship could significantly reorient the alliance and send ripples across the regional geopolitical environment, impacting U.S. strategic posture in the Indo-Pacific at the macro level. 

Notwithstanding the value of leader-level engagements, however, it is crucial to note that the most critical moves will be made in the coming weeks and months at the working level. On economic matters, the Commerce and Treasury Departments will guide the ship – both figuratively and literally vis-a-vis South Korea’s pledged USD 150 billion “Make American Shipbuilding Great Again” initiative – on the details of Seoul’s investment pledges. Meanwhile, the U.S. Trade Representative (USTR) will likely fight to include its laundry list of South Korean non-tariff barriers (NTBs) to U.S. trade in future talks, particularly given that the July 30 deal contained no specific reference to any USTR-identified NTBs. On security issues, much will depend on the direction U.S. Under Secretary of Defense for Policy Elbridge Colby sets in his forthcoming National Security Strategy, which will then see implementation in successive meetings with South Korean security officials in forums such as the Nuclear Consultative Group and smaller bilateral talks. 

These forthcoming working-level dialogues will be where vague promises become real policy with the power to shift the direction of the U.S.-South Korea relationship. For the two sides, their ability to adeptly maneuver through these upcoming discussions while avoiding myopic moves that provide short-term gains at the expense of the long-term health of the alliance will serve as the true test by which the current governments in Seoul and Washington will be judged in decades to come. 

South Korea-U.S. Tariff Deal: What’s in It and How Has It Been Received?

Amy Han

U.S. President Donald Trump has announced a new trade agreement with South Korea that includes a 15% tariff on South Korean imports. Trump said in a Truth Social post on July 30 that “Under the agreement, South Korea will invest $350 billion in the United States, with all investments to be U.S.-owned, U.S.-controlled, and personally selected by me.” Earlier this year, South Korean goods were temporarily subjected to a 25% “reciprocal” tariff in April, before Trump suspended the levies for several countries. 

The newly imposed 15% tariff will apply to South Korean exports of cars and semiconductors—two of the country’s most vital industries in its trade with the United States. However, South Korea’s steel and aluminum exports will be subject to a significantly higher 50% tariff, aligning with the global rate that has been recently established by Trump. 

Despite the steep duties, South Korean President Lee Jae Myung praised the agreement, calling it a strategic win that places South Korea on equal or stronger footing compared to other U.S. trading partners. On July 31, Lee hailed the new trade agreement with the United States as a significant diplomatic and economic breakthrough, stating it places South Korea on equal—or even stronger—footing compared to other major U.S. trading partners. Under the deal, the two countries will establish a $350 billion investment fund, with $150 billion earmarked for a strategic shipbuilding partnership. The remaining investment will support key sectors such as semiconductors, electric vehicles, and energy.

In a statement posted on Facebook, President Lee described the agreement as “the first major trade challenge” since his administration assumed office in June. “We have overcome a significant hurdle,” he wrote. “This agreement removes uncertainty surrounding our export conditions and ensures that U.S. tariffs on Korean goods will be no higher than those faced by our global competitors,” Lee added.

Although a trade agreement has been reached, significant challenges still lie ahead. Key elements of the $350 billion investment fund remain undefined, with the two sides leaving much of the framework deliberately vague. Disagreements are already surfacing over agricultural market access. While former President Trump asserted that South Korea had agreed to accept more U.S. products, including agricultural goods, the South Korean government firmly maintains that no additional market openings—particularly for rice and beef—are on the table.

Additional sets of negotiations are expected to address these outstanding concerns and integrate the trade agreement more closely with broader security cooperation. In the meantime, SouthKorean exporters and investors face ongoing uncertainty as Seoul accelerates efforts to diversify its economic partnerships beyond the United States to mitigate risks.

North Korea Reaffirms Nuclear Status Amid Shifting Inter-Korean Dynamics

Sheewon Min

North Korea has unequivocally rejected recent U.S. overtures to resume denuclearization talks, with Kim Yo Jong, sister of leader Kim Jong Un and a key political figure, reaffirming Pyongyang’s demand that Washington formally recognize the North as a nuclear weapons state. In an official statement disseminated via state media, Kim emphasized that any resumption of dialogue would require a fundamental shift in the U.S. approach, including tangible concessions in exchange for partial reductions in North Korea’s nuclear arsenal.

While acknowledging the “not bad” personal relationship between her brother and former U.S. President Donald Trump, Kim contended that such rapport is irrelevant absent substantive policy changes. She further warned that the United States’ continued refusal to acknowledge the North’s nuclear status would be perceived as “a mockery,” stressing that the country’s nuclear capabilities have significantly advanced since the first round of summits between Kim and Trump in 2018–2019.

“If the U.S. fails to accept the changed reality and persists in the failed past, the [North Korea]–U.S. meeting will remain as a ‘hope’ of the U.S. side,” Kim stated.

Although Trump has recently reiterated interest in reviving nuclear diplomacy, prior negotiations broke down in 2019 after the U.S. declined to lift key sanctions in return for North Korea’s dismantlement of its Yongbyon nuclear facility—a step viewed as insufficient by Washington. Since then, Pyongyang has resumed and intensified weapons testing, signaling its intent to further modernize its strategic arsenal.

In parallel, inter-Korean relations have seen modest, if tentative, shifts. The South Korean Ministry of National Defense recently began the removal of loudspeakers along the border used for psychological operations against the North. This decision, described by officials as a unilateral initiative taken without prior coordination with Pyongyang, was portrayed as a goodwill gesture aimed at reducing tensions. A military spokesperson noted, “This measure goes beyond mere suspension—it reflects a substantive commitment to de-escalation.”

The broadcasts, which had resumed over a year ago, were halted on June 11. Since then, North Korea has also ceased its own loudspeaker activities, though, unlike the South, it has shown no signs of dismantling its equipment. “There is no indication that North Korea is removing its loudspeakers,” the official stated. “Only routine maintenance on some devices has been observed.”

Despite these gestures, Pyongyang continues to rebuff diplomatic overtures from Seoul, suggesting a sustained unwillingness to reengage under current terms.

These developments underscore a significant strategic recalibration by North Korea, which increasingly treats its nuclear arsenal not as a negotiating tool but as a foundational pillar of national identity and deterrence. In the absence of new diplomatic frameworks that reflect this evolving posture, the likelihood of a breakthrough remains low. Unless the United States and South Korea are willing to adapt their strategies—either through phased engagement or by acknowledging the de facto nuclear status of North Korea—the current stalemate is poised to deepen, raising the risk of miscalculation and long-term instability on the Korean Peninsula.

This Week in Korean History

On August 1, 1976, Suyong Airport was relocated to Daejeo-do just west of Busan and renamed to Gimhae International Airport, becoming the region’s preeminent airfield. Today, Gimhae services over 10 million passengers per year.