The task ahead for Korean trade in the Trump era

Home > Business > Economy

The task ahead for Korean trade in the Trump era

Published: 18 Aug. 2025, 00:06

Audio report: written by reporters, read by AI

Lee Joo-hyoung

The author is a professor at the University of Seoul Law School and a lawyer.

The Bretton Woods system was born in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. From the launch of the General Agreement on Tariffs and Trade (GATT) in 1947 to the creation of the World Trade Organization (WTO) in 1995, it was the United States that drove the reorganization of international trade rules and order. America was not only a demolisher of tariff and nontariff barriers, but the architect that wove new agendas into the global trading system.

A television screen at Seoul Station in Yongsan District, central Seoul on July 31 shows a report that U.S. President Donald Trump's administration has agreed to impose 15 percent tariffs on Korea, 10 percentage points lower than what was proposed, under a trade deal that would charge America no tariffs. [YONHAP]

That is why it is striking — even ironic — that the U.S. Trade Representative now declares: “The current nameless order under the WTO is not sustainable.” In the 200 days since the start of Trump’s second term, Washington boasts it has pried open more foreign markets than three decades of the WTO era. With the “Turnberry system,” it has announced the WTO’s demise. Yet, in last month’s trade deal with Indonesia, the United States insisted on the “implementation of WTO agreements.” A new order, it seems, is one that also borrows opportunistically from the old — the very definition of the new normal.

In this upheaval, Seoul, fresh from concluding its tariff negotiations with Washington, must now prepare for follow-up talks. The “Trump tariff bomb” will weigh heavily on Korea’s export front lines in the second half of the year, both in value and in volume. Among the most sensitive issues will be the exchange rate. During Trump’s first-term renegotiation of the Korea-U.S. FTA, currency manipulation was already raised. It is prudent to expect that Washington may once again reach for the currency card.

A press conference marking the implementation of the Korea-U.S. Free Trade Agreement (FTA) is held at the Grand InterContinental Seoul in Samseong-dong on March 15, 2012, hosted by the Korea International Trade Association. [JOONGANG ILBO]

A second flashpoint will be digital services. At first, Trump’s gaze fell mainly on tariffs and goods, but services — and particularly the digital economy — cannot be ignored. USTR chief Jamieson Greer has repeatedly flagged trade barriers confronting U.S. companies in the annual National Trade Estimate (NTE) report. Now Washington is vowing both to dismantle those barriers and to wield tariffs as a defensive weapon.

The EU was pressed into scrapping network usage fees in its talks, while Indonesia agreed to duty-free electronic transmissions. Korea, too, can expect demands to dismantle certain digital nontariff barriers. Some of these changes could be painful, but they may also offer an opening. Fiercer competition from abroad could become the spur for sharper technological innovation at home. Careful calibration will be essential.

Korea, second only to Singapore in the number of FTAs signed, must also be alert to a very different format of deal now emerging. The U.S.-U.K. trade pact was published as nonbinding “general terms.” The U.S.-Indonesia deal was released only as a joint statement. With the EU, the public saw only a White House fact sheet.

President Donald Trump, center, and Korea’s trade delegation pose for a group photo at the White House in Washington, on July 30 after reaching a tariff agreement. [WHITE HOUSE]

Trump’s new doctrine is that every agreement will be conditional — hinging on market opening and on promises to invest or purchase — and that compliance will be judged not by the WTO’s slow dispute-settlement system, but by Washington itself. What constitutes a violation, and how any penalty will be applied, remains opaque. Even a well-concluded negotiation could unravel in implementation. That is why the more unfamiliar the format, the greater the need to secure procedural clarity and transparency in evaluation.

When Japan cut its tariffs from 25 percent to 15 percent, it stumbled badly over whether Most-Favored Nation (MFN) status applied. Korea, by contrast, weathered the storm more smoothly thanks to its FTA with the United States. But Tokyo should not be seen only as a rival. Under Trump’s pressure, cooperation with other countries may be the only way to endure. Many nations squeezed by Washington are seeking new alliances and diversification. This could inject momentum into long-stalled talks to upgrade existing FTAs.

For Korea, the priority must be to consolidate and expand the FTA network painstakingly built over decades. Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) can no longer be postponed. It is the logical next step in Korea’s trade strategy — and a necessary shield against the uncertainties of the Trump era.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.