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Lee-Trump summit's joint statement failure hints at high-stakes game of chicken

Published: 28 Aug. 2025, 18:28 Updated: 28 Aug. 2025, 19:04

Korean President Lee Jae Myung, left, and U.S. President Donald Trump chat in the Oval Office at the White House in Washington on Aug. 25. The two leaders held their first bilateral summit, followed by a working lunch. [JOINT PRESS CORPS]

The absence of a joint statement following President Lee Jae Myung’s summit with U.S. President Donald Trump was due to Washington’s refusal to accept Seoul’s demand to specify a 15 percent tariff ceiling on Korean exports such as automobiles and semiconductors.

Instead, U.S. negotiators countered by demanding that Korea provide a detailed schedule and structure for its pledged $350 billion investment in the United States, a condition that Korean officials rejected, according to diplomatic sources.

‘Postponement, not collapse’

“A joint statement was derailed by disagreements over auto tariffs and the specifics of Korea’s investment plan,” a Korean government official told the JoongAng Ilbo on Wednesday. “The United States actually pushed harder for a statement at the summit, but Seoul decided to delay the timing.”

Washington agreed to accept Korea’s firm refusal to further open its rice and beef markets, according to the official. But in return, it pressed Seoul to significantly increase the proportion of direct investment in the $350 billion package and to codify that commitment.

The demand clashed with Seoul’s position that much of the pledged funds would take the form of loans and guarantees with low risk of default. In effect, the United States was asking Korea to hand over a blank check to be spent at Washington’s discretion. When Korea balked, no agreement was signed.

A diplomatic source said talks continued until just before the summit, but were halted after Seoul concluded it “could not make a bad deal for the sake of speed.” The source added, “Strictly speaking, the summit did not terminate negotiations, but pushed back the timeline.”

Korean President Lee Jae Myung, left, and U.S. President Donald Trump chat at the White House in Washington on Aug. 25. [JOINT PRESS CORPS]

$900 billion ‘game of chicken’

The United States signaled it will escalate pressure on both Korea and Japan immediately after the summit.

“What you’re going to see is a national and economic security fund built with the Japanese money, the Korean money and other countries’ money,” said U.S. Commerce Secretary Howard Lutnick to CNBC on Tuesday. “They’re going to give us money to build our infrastructure out in America.”

Lutnick stressed that this was not a “sovereign wealth fund” but one funded with $350 billion from Korea and $550 billion from Japan — a total of $900 billion.

President Lee Jae Myung listens to U.S. Secretary of Commerce Howard Lutnick at a Korea-U.S. business roundtable at a hotel in Washington on Aug. 25. [JOINT PRESS CORPS]

A Korean government source dismissed the announcement as “an unfamiliar concept never raised during negotiations” and interpreted the timing as “a pressure tactic” against Seoul and Tokyo.

The official also noted that Seoul’s pledge was benchmarked on Japan’s earlier $550 billion decision. “There is an internal view that Korea can afford to wait for Japan’s negotiation outcome before finalizing its own deal,” he said.

Amid signs of Seoul-Tokyo coordination, Japanese Minister in charge of Economy Revitalization Ryosei Akazawa abruptly canceled his planned trip to the United States on Wednesday. Akazawa had initially said he would discuss auto tariffs and investment terms, signaling Tokyo faces the same dilemma as Seoul.

U.S. President Donald Trump, right, meets with President Lee Jae Myung in the Oval Office of the White House on Aug. 25. [AP/YONHAP]

Tariffs biting automakers

The delay in a final deal means both Korea and Japan will continue to face steep U.S. tariffs on their core export — cars. Washington currently imposes a 25 percent tariff on Korean vehicles and 27.5 percent on Japanese and European Union (EU) vehicles.

The EU recently secured a joint statement pledging to cut its tariff rate to 15 percent, contingent on legislative approval tied to increased imports of American farm goods.

That leaves Korea and Japan paying the highest tariffs for now.

“Automobiles are deeply integrated with suppliers, so production and exports cannot simply be stopped even when margins shrink,” said an industry source. “At 25 percent tariffs, the more we sell, the more losses accumulate.”

U.S. President Donald Trump, left, welcomes President Lee Jae Myung at the White House in Washington on Aug. 25. [REUTERS/YONHAP]

Diplomatic observers warned that tariffs on semiconductors and pharmaceuticals could be next.

“The United States has already set 15 percent tariffs for the EU in those sectors, while leaving Korea and Japan with only most-favored-nation treatment,” one source noted.

Still, some analysts believe that Trump faces political risks if high tariffs drive up car prices at home. “Sustaining this game of chicken too long could backfire with American consumers,” one expert said.

“The negotiations are far from over. In this new era, endless negotiations may become the norm, as the real challenge is working out concrete results and details,” said Yoo Myung-hee, former trade minister, at a forum hosted by the Korea Economic Institute in Washington on Wednesday.

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.
BY KANG TAE-HWA [[email protected]]