Korea must secure tariff terms no worse than Tokyo’s as investment and export stakes grow
As Japan and the United States conclude a high-profile tariff agreement, attention has quickly turned to South Korea. Tokyo’s willingness to open its agricultural market, commit to joint energy projects and pledge a record-breaking $550 billion in US-bound investment has earned it a reduction in reciprocal tariffs from 25 percent to 15 percent — a benchmark now hardening into a minimum standard for Washington’s other major trading partners.
South Korea finds itself in a more compressed timeframe. The bilateral 2+2 ministerial trade talks scheduled for July 25 in Washington were postponed because US Treasury Secretary Scott Bessent had an urgent scheduling conflict.
Seoul’s Finance Minister Koo Yun-cheol was informed just before departure, though Korean industry and trade officials already in Washington are continuing working-level consultations. Seoul has emphasized that the postponement does not reflect any change in negotiating intent. But with the reciprocal tariffs slated to resume on Aug. 1, time is growing short.
The Japan-US deal has raised the stakes. In addition to securing a 10-point tariff cut, Japan agreed to increase US rice imports by 75 percent, purchase 100 Boeing aircraft and participate in the Alaskan liquefied natural gas project. The US government claims the agreement will generate hundreds of thousands of domestic jobs and boost strategic industries.
For South Korea, where more than 60 percent of 2024’s $66 billion trade surplus with the US came from automobiles, a failure to match Tokyo’s deal could erode competitiveness in a key export sector. Automakers like Hyundai and Kia, which compete directly with Japanese peers in the US market, would be particularly exposed.
In anticipation of this, Seoul has assembled a proposed investment package exceeding $100 billion, drawing on commitments from major conglomerates such as Samsung, SK, Hyundai and LG. The plan, modeled loosely on Japan’s, may expand further as talks progress. Additional participation in LNG development, including through public financial institutions, is also under review.
However, Tokyo’s massive pledge — roughly double Korea’s in proportionate terms — and its acceptance of politically sensitive concessions raise the bar significantly.
Washington’s pressure tactics remain blunt. US President Donald Trump has warned that only countries that open their markets will be rewarded with lower tariffs, threatening “much higher” duties otherwise. His administration has also criticized South Korea’s non-tariff barriers, from digital platform regulations to agricultural restrictions.
While Seoul has ruled out rice and beef as bargaining chips, citing food security, the government is reportedly exploring other forms of market access, including in digital trade and manufacturing partnerships.
In parallel, Seoul must navigate additional entanglements. US demands around defense cost sharing, semiconductor collaboration and regulation of Korean digital platforms all intersect with the trade agenda.
Meanwhile, reports indicate the European Union may also be nearing a 15 percent tariff agreement with Washington — a sign that may further isolate South Korea unless it can close a deal soon.
Tokyo’s agreement is not without trade-offs. Much remains unclear about the terms and timelines of Japan’s commitments. But the symbolism of its 15 percent tariff outcome is already shaping expectations. For South Korea, the goal must be to avoid terms materially worse than those given to Japan or the EU. Any outcome perceived as inferior would carry real consequences, both economically and diplomatically.
Protecting high-employment, high-surplus sectors such as automobiles and steel must be a central priority. To that end, South Korea’s negotiators must aim for a calibrated strategy: offering proportionate concessions, targeting returns in industrial cooperation and investment, and securing transition support for exposed sectors.
As deadlines near and peer deals take shape, the challenge is no longer just to reach an agreement, but to secure terms that protect South Korea’s standing in its most critical export market.
khnews@heraldcorp.com
