Recently, US President Donald Trump announced a 25% tariff on all imports from South Korea starting August 1. According to Nikkei reports, political turmoil caused by the impeachment and removal of former South Korean President Yoon Suk-yeol in late 2024 halted tariff negotiations for half a year. The newly inaugurated regime of Lee Jae-myung opted for a strategy of extending the hesitation period, successfully avoiding the worst scenario despite receiving the tariff notification.

Trump is pressuring South Korea to significantly increase defense spending and share costs of US troops stationed in Korea, signifying his intention to intertwine security guarantees with tariff negotiations to force concessions from South Korea. Analysts suggest that the US may aim to heighten competition between Japan and South Korea to increase its own revenue while deterring other nations.

The proposed 25% tariff had already been hinted at by Trump back in April. The South Korean government promptly released a strong statement in the middle of the night, expressing confidence in reaching a new trade agreement with the US. With a limited domestic market relying on manufacturing sectors such as automobiles, semiconductors, and steel, the economic impact of the high tariff on South Korea is expected to be particularly severe.

The Lee administration emphasizes the importance of economic recovery, facing internal consumption stagnation and sluggish external exports. The outcome of this tariff negotiation could directly influence President Lee’s approval ratings, and failing to hold direct discussions with Trump is seen as a significant disadvantage.