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Trump tariffs plunge Korea into chaos, with no president to take the helm

Published: 03 Apr. 2025, 18:50 Updated: 04 Apr. 2025, 09:13

SHIN HA-NEE
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Acting President Han Duck-soo, left, chairs an emergency response meeting on the U.S. ″reciprocal″ tariff announcement held at the government complex in central Seoul on April 3. [PRIME MINISTER'S SECRETARIAT]

The United States imposed a 26 percent tariff on Korea in the early hours of Thursday morning, effectively nullifying a 13-year FTA between the two countries and proving months of phone negotiations and long-haul flights to Washington futile. The announcement plunged the nation's government offices into chaos just a day ahead of a scheduled ruling on its impeached president, with no clear figure to take the lead.

Korea was slapped with a massive 26 percent tariff rate under the sweeping duties, the highest among 20 nations that had signed FTAs with the United States aside from Canada and Mexico, which were missing from the latest list.

Korea's designated rate is higher than Singapore’s 10 percent, Israel’s 17 percent, the European Union's 20 percent and even Japan’s 24 percent — the latter of which does not have an FTA with the United States.

The Korean government has been scrambling to convince Washington that Trump’s repeated argument — that Korea’s tariffs were four times higher than those of the United States — was inaccurate and dispatched high-ranking officials to Washington for back-to-back meetings to secure favorable treatment. Yet such efforts unfolded amid a prolonged leadership vacuum following the impeachment of not only President Yoon Suk Yeol but also Prime Minister Han Duck-soo, putting it at a disadvantage at the bargaining table.

Ahn Duk-geun, minister of trade, industry and energy, visited Washington twice, first in February and again in March, to meet U.S. Commerce Secretary Howard Lutnick.

Regardless, the White House still tallied Korea’s tariffs charged to the United States, which included “currency manipulation and trade barriers,” at a striking 50 percent — higher than the EU’s calculated 39 percent and Japan’s 46 percent.

Korea's Minister of Trade, Industry and Energy Ahn Duk-geun, right, shakes hands with U.S. Secretary of Commerce Howard Lutnick in Washington on March 21. [MINISTRY OF TRADE, INDUSTRY AND ENERGY]

Although some of Korea’s key exports — including semiconductors and pharmaceuticals — were exempt from the reciprocal tariffs, Seoul now must navigate the implications of the freshly unveiled tariffs without a president to be Trump's counterpart in negotiation, as the latest announcement effectively nullified its 13-year-old FTA.

The government tried to reassure the market that it had contingency plans in place, switching to full emergency mode, but the overnight announcement continued to send shock waves across the country, with many questions left unanswered.

For example, Trump initially announced that Korea would face a 25 percent tariff in his speech at the Rose Garden. Though an annex of the executive order released shortly after the speech clarified that the rate was actually 26 percent, Korea’s Ministry of Economy and Finance; Ministry of Trade, Industry and Energy; and even Bank of Korea all cited the 25 percent rate in official statements.

The White House did not provide any explanation for the discrepancy, and the Korean government, was not aware of the inconsistency in advance, Yonhap News reported the same day.

The government attempted to mitigate the raging confusion throughout a series of emergency meetings Thursday.

“The negotiation begins in full swing from now on,” acting President Han Duck-soo said during an emergency task force meeting at 7 a.m. Thursday at the government complex in central Seoul, urging the industry minister to work to minimize potential damage to domestic companies.

Finance Minister and Deputy Prime Minister Choi Sang-mok promised to “leverage all market stabilization measures available if volatility surges excessively” during a meeting on macroeconomic and financial issues, dubbed the F4 meeting, an hour later.

“The U.S. government’s reciprocal tariff implementation is expected to drive volatility across global financial markets, and the domestic financial and foreign exchange markets are also likely to react strongly,” said Choi.

The government has been “thoroughly preparing its contingency plan based on possible scenarios,” the finance minister said, adding that the authorities will continue to closely monitor the situation around the clock.

From left: Financial Supervisory Service Gov. Lee Bok-hyun, Bank of Korea Gov. Rhee Chang-yong, Finance Minister Choi Sang-mok and Financial Services Commission Chairman Kim Byoung-hwan converse with each other during a meeting in Jung District, central Seoul, on April 3. [YONHAP]

Ahn, meanwhile, expressed “regret” while chairing a public-private response meeting with government officials and industry representatives at 11 a.m. the same day.

“We regret that the U.S. tariffs, which will have a huge impact on the global trade environment, have materialized,” said Ahn. “The government is taking a hard look at potential negative impact that tariff measures could have on Korea’s exports to the United States, as well as global trade activities.”

The ministry plans to announce emergency support measures for affected companies and continue negotiations with senior officials.

Updated, April 4: Corrected the duration of the Korea-U.S. FTA to 13 years.

BY SHIN HA-NEE [[email protected]]