None at the helm: U.S.-Korea trade talks adrift after key leadership resignations

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None at the helm: U.S.-Korea trade talks adrift after key leadership resignations

Published: 02 May. 2025, 19:02 Updated: 04 May. 2025, 17:04

PARK EUN-JEE
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Audio report: written by reporters, read by AI

Former Prime Minister Han Duck-soo, who resigned from the post the day before, steps down from the podium after announcing his candidacy for the presidential election at the National Assembly in Yeouido, western Seoul, on May 2. [YONHAP]

[NEWS ANALYSIS]

In the absence of a president, both Korea's prime minister, who recently held a phone call with U.S. President Donald Trump, and finance minister, tasked with handling currency issues, have stepped down, throwing ongoing tariff negotiations into turmoil.

The unprecedented leadership vacuum until the June 3 presidential election has put Minister of Trade, Industry and Energy Ahn Duk-geun and acting President and Education Minister Lee Ju-ho at the forefront of the tariff talks that initiated last month.

Experts predict that the Korean government will try to buy time until the new president takes office, although the United States is pushing hard to get the deal done as soon as possible.

Former Prime Minister Han Duck-soo, who has solid experience in trade negotiations, stepped down on Thursday to run for president while former Finance Minister Choi Sang-mok, who had been developing a rapport with U.S. Treasury Secretary Scott Bessent, resigned the same day following the Democratic Party’s attempt to impeach him.

Divided over pace

Former Finance Choi Sang-mok, second from left, and Industry Minister Ahn Duk-geun, third from left, brief the press on the outcome of the trade talks with the United States at the Korean Embassy in Washington, on April 24. [KIM HYOUNG-GU]

Differing positions on the pace of negotiations were evident from the beginning. The Korean government said that it aims to seal the deal, dubbed the July Package, which was stated as July 8, the day that the 90-day tariff grace period ends.

But the U.S. tone contrasts Korea’s assurance that the next administration will decide the outcome of trade talks.

“They are actually much more keen to come to the table, get this done and then go home and campaign on it,” Bessent said Tuesday, speaking of allies including Korea and Japan.

“We have neither conveyed nor discussed any intention to finalize the framework of negotiations with the United States before the presidential election and then move on to campaigning,” the Ministry of Economy and Finance said in a statement in response to the comment.

With more key leaders departing, experts say that a stalling strategy may kick in.
“The remaining leaders will likely opt for a managed approach instead of making a definitive decision,” said a source in the trade industry.

Standard & Poor's Global Ratings (S&P) acknowledged that the domestic political turmoil sparked by former President Yoon Suk Yeol’s short-lived declaration of martial law undermines stability but didn’t significantly harm the economy’s credibility.

“The unexpected declaration of martial law in the country early in December 2024 hurt confidence in political stability, in our view,” S&P said in a statement.

Currency pressure
As the United States proposed adding currency policy to the list of negotiation areas, the absence of a finance minister could further delay related discussion.

Choi said that the Bessent suggested that currency be dealt with separately between Korea’s Ministry of Economy and Finance and the U.S. Treasury Department.

Former Deputy Prime Minister and Finance Minister Choi Sang-mok leaves the chamber, following the passage of the supplementary budget for 2025 during a plenary session at the National Assembly in Yeouido, western Seoul, on May 1. [NEWS1]

Following Choi’s departure, First Vice Minister of Economy and Finance Kim Beom-seok will take over as acting Finance Minister, although many predict that the acting role will be limited to handling minor matters.

“The Trump administration is expressing dissatisfaction not only with tariffs, but also with nontariff barriers — particularly what it sees as the devaluation of major currencies, which in turn leads to an overvalued U.S. dollar,” said Park Sang-hyun, a researcher at iM Securities.

“The administration’s decision to spotlight exchange rate issues is seen as an attempt to use currency appreciation pressure as an additional trade negotiating tool,” the researcher said.

The won-dollar currency gyrated on Friday following the resignations of key leaders.

The won sharply depreciated against the dollar to 1,440 won in the early trading but reversed to close at 1,405.3 won, marking the lowest level since Dec. 3.

Finance-related government agencies vowed to stay vigilant on Friday to ensure the stability of the currency market.

BY PARK EUN-JEE [[email protected]]