(News Focus) Corporate investment, ties in strategic industries keys to negotiation on U.S. tariffs: experts

South Korea must bring “bargaining chips” to the negotiation table with the United States, such as new investments in the U.S. and bilateral cooperation in key strategic industries, to minimize the possible impact of “America First” trade policies and U.S. tariff hikes, local trade experts stressed Friday.

“It’s totally business,” Bark Tae-ho, president of Commerce Institute of Lee & Ko and former trade minister of South Korea, told Yonhap News Agency on how the Korean government should negotiate with the U.S. on the latter’s series of tariff imposition plans.

“Trump is a person who likes transactions … and there are a lot of gifts Seoul can provide in a package deal, such as more corporate investment in the U.S., cooperation in the shipbuilding industry and imports of U.S. energy,” Bark said.

This week, U.S. President Donald Trump announced plans to impose a 25 percent tariff on all steel and aluminum imports, and country-specific reciprocal tariffs on Washington’s major trading partners, sparking concerns here that major South Korean industries may be directly affected.

In 2024, South Korea’s trade surplus with the U.S. reached US$55.7 billion.

Seoul was also the fourth-largest exporter of steel and aluminum products to the U.S. last year, according to data from the U.S. International Trade Administration.

To address such concerns, South Korea’s Deputy Minister of Trade Park Jong-won will visit Washington next week to meet with officials from the U.S. Department of Commerce and U.S. Trade Representative (USTR).

A business delegation, led by SK Group Chairman Chey Tae-won, also plans to visit the U.S. next week to discuss bilateral economic cooperation with political and business leaders there.

“South Korea is one of the most important trade partners for the U.S. across various industries from semiconductor and battery to shipbuilding and energy,” said Austin Chang, president of the institute for international trade under the Korea International Trade Association (KITA).

“If we can persuade the U.S. that South Korea is a country that can replace China in global supply chain and create synergy with Washington in strategic industries, such as defense, biopharmaceuticals and semiconductors, we may be able to reduce the blow on the industries here from the U.S. tariffs,” he said.

Chang noted shipbuilding cooperation, in particular, can be a good bargaining chip for negotiations with the U.S. as Trump previously showed interest in collaborating with South Korean shipyards, particularly in naval shipbuilding, repairs and maintenance.

The U.S. will also have high demand for shipbuilding, where South Korea and China currently show leadership, as the country aims to import more energy under the Trump administration, he explained.

South Korea should closely refer to Japan’s strategy of bringing a package of investment plans and cooperation projects to the negotiation table with the U.S., Chang highlighted, noting Seoul and Tokyo are in a similar position in terms of posting large trade surpluses against the U.S.

Last week, Japanese Prime Minister Shigeru Ishiba held his first in-person summit with Trump, unveiling Tokyo’s plan to invest $1 trillion in the U.S. and boost its purchases of U.S. defense equipment, according to media reports, in an apparent effort to blunt the edge of Trump’s protectionist trade policies.

Experts say South Korea should brace for potential issues related to non-tariff barriers.

“South Korea is in a relatively favorable position compared with other countries in terms of tariff barriers, as we have a free trade agreement (FTA) with the U.S.,” Heo Yoon, chairman of the National Trade Negotiation Advisory Committee, said.

Under the Korea-U.S. FTA, the average tariff rate on imports from the U.S. had stood at 0.79 percent as of 2024, with the rate lowered when considering refunds, according to the finance ministry. The tariff rate on manufactured goods from the U.S. is already at zero percent.

“But there are a few non-tariff barriers the U.S. has raised concerns with, such as network fees and Seoul’s move to regulate big online platforms,” Heo said, referring to U.S. tech giants, like Google and Meta Platforms.

Heo explained key U.S. trade officials believe these regulations and laws in different countries are “unfair” and make the U.S. suffer trade deficits against those countries.

Earlier in the day, acting President Choi Sang-mok said the impact of Trump’s reciprocal tariffs may not significantly affect South Korea’s economy due to the low tariff rate, but instructed economy-related ministries to establish a task force to thoroughly assess the country’s vulnerability and non-tariff barriers.

The industry ministry has said it will closely communicate with related industries to draw up a response strategy to U.S. tariffs.

“The policy review by the U.S. Department of Commerce and USTR will likely determine Washington’s trade policies for different nations,” an official at the industry ministry said, adding the government will work to minimize the U.S. tariffs’ impact on South Korea.