Tariff negotiations with Trump now or never, experts say

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Tariff negotiations with Trump now or never, experts say

Published: 03 Apr. 2025, 19:18 Updated: 03 Apr. 2025, 20:00

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

U.S. President Donald Trump speaks about lists of countries' barriers to U.S. exports during a tariff announcement in the Rose Garden of the White House in Washington on April 2. [EPA/YONHAP]

With U.S. President Donald Trump slapping unexpectedly hefty 26 percent reciprocal tariffs on Korea, experts urge the country to prepare for nationwide negotiations to lower the rate.

Korea’s technological prowess in shipbuilding, potential engagement in Alaska's liquid natural gas (LNG) project and concession on beef imports could be bargaining chips, being sectors in which the United States asked for Korea’s help as an alternative partner to China.

Trump on Wednesday announced 26 percent reciprocal tariffs on Korea — initially stated to be 25 percent during the speech — in his so-called “Liberation Day” tariffs, calling Korea one of the “worst offenders.”

Korea’s 26 percent-levy is the highest rate among 20 countries that have an FTA with the United States, aside from Canada and Mexico that were missing from the latest list. That’s even higher than the rate given to Japan, which was slammed with 24 percent, though the country doesn’t have an FTA, while the European Union (EU) is subject to 20 percent tariffs. Japan and the EU both are countries with which the United States has a bigger trade deficit than it does with Korea.

Experts examine the tariffs as “more excessive than expected” in the “worst scenario could even thought of,” adding that Korea must get its act together to sit at the negotiation table with Trump, especially in the current absence of a president.

The Korea Institute for International Economic Policy estimated that Korea’s exports will suffer up to $44.8 billion sink in a scenario of all countries are imposed with 20 percent of sweeping duties, while China with 60 percent.

Korea Institute for Industrial Economics & Trade also predicted that Korea’s exports to the United States would drop 13.1 percent in a scenario of Korea getting 20 percent tariffs while China got 60 percent and Mexico and Canada got 10 percent. In reality, Korea, Mexico and Canada were slapped with higher tariffs, meaning that the drop will be sharper than estimated.

“It’s no different with Trump attempting to rescind the FTA with Korea, that he himself revised in his first presidency,” said Kang In-su, an economics professor at Sookmyung Women's University. “Korea must thoroughly look over the seven pages of the White House’s National Trade Estimate Report in which it detailed 'trade barriers’ from Korea and give up on some sectors.

“The beef import can be a good negotiation card. There’s no evidence that American beef from cattle aged 30 months or older is harmful to humans; Korea can concede on this.”

U.S. President Donald Trump announces reciprocal tariffs as he holds a chart of ″worst offenders,″ placing Korea at seventh, during an event titled ″Make America Wealthy Again″ in the Rose Garden at the White House in Washington on April 2. [AFP/YONHAP]

Trump claimed that Korea has been charging an average of 50 percent tariffs on the United States — including up to 513 percent on American rice — citing nontrade barriers like automobile approval standards and U.S. beef imports, and the 26 percent levies are a “discounted” rate.

“U.S. automakers face a variety of nontariff barriers that impede access to Korean automotive markets, including nonacceptance of certain U.S. standards, duplicative testing and certification requirements and transparency issues,” the White House said in the executive orders. “Due to these nonreciprocal practices, the U.S. trade deficit with Korea more than tripled from 2019 to 2024.”

Some advise that Trump may have deliberately imposed a higher rate, expecting to gain a lot from Korea, especially in technology in sectors in which the United States holds a weaker standing.

“Korea has to emphasize that it is an essential country in the global supply chain when United States keeps tension with China,” said Chang Sang-sik, head of the Institute for International Trade under the Korea International Trade Association. “Tariffs were forewarned; from now on is what truly matters.

“Shipbuilding, the sector where Trump has already requested help, and even in semiconductors, batteries and solar power, Korea must prepare a package of programs to help the United States and share our technology with them,” Chang added. “The United States is demanding Korea be involved in the Alaska LNG project, and that could also be an option.”

The only good thing in the latest declaration is that reciprocal tariffs won’t apply to cars and steel, the categories that have already faced 25 percent tariffs, which took effect on Thursday, avoiding a “disaster” in which the hike reaches 50 percent on certain products.

Cars are Korea’s No. 1 export product to the United States, making up 30 percent of shipments to the country. Hyundai Motor and Kia, the two largest automakers, currently make 60 percent of vehicles for the U.S. market in Korea and Mexico, while GM Korea exports almost 90 percent of its production to the U.S. market.

“Automakers barely dodged a bullet, but still, the auto tariffs themselves are a big threat; Hyundai’s only hope, for now, is to keep pushing to delay the tariffs, just as Trump did for Mexico and Canada,” said Lee Jae-il, an analyst at Eugene Investment & Securities.

Key products like semiconductors, aluminum and pharmaceuticals are also exempt from the sweeping tariffs, but Trump still hinted that he may impose additional tariffs on certain categories.

BY SARAH CHEA [[email protected]]