Talk with Trump quickly to avoid tariff torment, ex-trade ministers urge

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Talk with Trump quickly to avoid tariff torment, ex-trade ministers urge

Published: 20 Jan. 2025, 06:00

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

U.S. President-elect Donald Trump gestures as he speaks during a press conference at Trump Tower in New York City on Sept. 6, 2024. [REUTERS/YONHAP]

Korea must be quick on the trigger on trade dialogue with incoming U.S. President Donald Trump as a means of dodging the biggest bullets in his proposed tariff war, former trade ministers have urged.

The incisive advice arrives amid Trump’s looming threat of blanket tariffs of 10 to 20 percent on all imports, which may cut Korea’s exports to the United States by more than $30 billion annually and jeopardize domestic companies’ profitability.

“The more we delay [the talks], the greater the loss,” said former Trade Minister Yoo Myung-hee during an interview with the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, on Thursday, based on her firsthand experiences with the first Trump administration regarding a revision to the Korea-U.S. FTA during her term between 2019 and 2021.

Korea was the first country to initiate trade negotiations at the time when Trump was pushing hard for tariffs, managing to keep almost all agreements in place, according to Yoo, the only real concession being an extension of the 20-year tariff on pickup trucks.

For instance, Seoul maintained the 35 percent regional value content rule on Korean-made cars that requires at least 35 percent of parts to be products of either Korea or the United States to qualify for the FTA and tariff exemptions.

Mexico and Canada, who launched negotiations later than Korea, had to raise the percentage to 75 percent from 62.5 percent.

“Korea doesn’t have to be the first this time as we are not part of Trump’s prioritized target countries [which include China, Canada and Mexico] but must be quicker than other major competing countries,” Yoo said.

Bark Tae-ho, who served as trade minister in 2012 and 2013 and is currently the president of law firm Lee & Ko’s Global Commerce Institute, warns that Korea must be thoroughly prepared before attempting formal talks with Trump as it could otherwise result in unintended side effects.

The trade expert pinpointed the example of Canada, where Prime Minister Justin Trudeau immediately visited Trump’s Mar-a-Lago property in Florida after the president-elect announced his intention to slap tariffs of 25 percent on Canadian imports. The discussion ended with Trump mocking Trudeau by saying Canada could become the “51st state of the United States.” The ensuing public backlash weakened the prime minister, who soon after announced his resignation on the back of a series of political crises for his party.

Some advise Korea to avoid showing a "patronizing" attitude in future talks with the incoming administration.

“Trump and his allies’ focus is not whether to impose tariffs, but how to impose them by minimizing side effects like inflation,” said Yeo Han-koo, former trade minister from August 2021 to May 2022 who is now a senior fellow at the Peterson Institute for International Economics, a U.S. think tank.

“Their allies have a consensus view and are determined.”

Yeo also suggested that Korea must prepare a comprehensive package deal.

“It’s advantageous to launch a package deal that includes all issues like trade and the economy at the same time when facing Trump rather than trying to talk to him on a case-by-case basis,” Yeo said, adding that the president-elect is a negotiation veteran who is good at pressuring the opponent in crunch time.

Kim Jong-hoon, former trade minister whose term ran from August 2007 to December 2011, also said that Korea must be alert to becoming too optimistic about Trump’s earlier comments hinting at collaboration in the shipbuilding industry.

Trump has mentioned the United States’ need for help from Korea’s shipbuilders as a way to counter China’s rapid buildup of warships during his first phone call with Korean President Yoon Suk Yeol in early November. After the news, shares of Korean shipbuilding companies soared on hopes of massive deals with the United States.

“Korea should stay on their toes, never too optimistic about his remarks, so that it can actually benefit for the country's interests,” Kim said, pinpointing that the United States may attempt to shift its financial burden to Korea when organizing deals in the shipbuilding sector, where the country is suffering at the moment.

But above all, Korea’s most urgent task is to end and resolve the ongoing political chaos, all four former trade ministers emphasized in unison.

“Trump knows well which side his bread is buttered on, and he will attempt to maximize his interests against Korea rather than wait for our situation to get resolved,” Kim added.

The former ministers also urged Korea to stay sharp, especially when Washington pushes Seoul to take a stand in its tensions with Beijing, considering that China is Korea’s biggest trade partner.

BY KIM MIN-JOONG, JANG WON-SEOK AND SARAH CHEA [[email protected]]