Tariff negotiations still in deadlock as Korea's trade negotiator returns from Washington

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Tariff negotiations still in deadlock as Korea's trade negotiator returns from Washington

Published: 19 Sep. 2025, 20:15

Audio report: written by reporters, read by AI

Trade Minister Yeo Han-koo speaks to reporters upon arriving at Terminal 2 of Incheon International Airport on Sept. 19. [YONHAP]

Tariff negotiations between Korea and the United States remain deadlocked, raising concerns for Korean exporters as talks show signs of dragging on.

Trade Minister Yeo Han-koo, Korea’s chief trade negotiator, returned on Friday from a four-day trip to Washington and told reporters, “We explained in detail why Japan and Korea are different.”

Korea and the United States reached a trade deal in late July to reduce mutual tariffs and auto tariffs from 25 percent to 15 percent, with Korea pledging $350 billion in U.S. investment.

But disagreement persists over the investment structure. The United States wants Korea to adopt an equity-based approach similar to Japan’s, while Korea seeks to reduce its burden through guarantees.

Japan, which concluded its talks first, pledged $550 billion in investment and signed a memorandum of understanding (MOU) giving the United States control over investment decisions and 90 percent of profits, with 50 percent before capital recovery. In return, Washington cut tariffs on Japanese cars from 27.5 percent to 15 percent starting Sept. 16, giving Japanese vehicles a 10 percentage-point advantage over Korean ones.

Last Friday, U.S. Commerce Secretary Howard Lutnick warned Korea to “accept the deal or pay the tariffs,” increasing pressure.

President Lee Jae Myung also pushed back in a recent TIME Magazine interview, saying of the $350 billion fund that the United States demands were so strict that “if I were to agree then I would be impeached.”

Industry Minister Kim Jung-kwan attends a steel industry meeting held at Posco's headquarters in Pohang, North Gyeongsang on Sept. 19. [MINISTRY OF TRADE, INDUSTRY AND ENERGY]

Industry Minister Kim Jung-kwan said at a Tuesday press briefing that while he sometimes shared the sentiment that “it would be better to scrap the deal than hand over $350 billion for tariff relief,” he still believed concluding the talks was essential for Korea’s long-term relationship with the United States.

The government has communicated to Washington that investing most of the $350 billion in cash could destabilize Korea’s foreign exchange market. Discussions are also underway on a possible unlimited currency swap to ease the impact.

“We have presented objective data and analysis to show how Korea differs from Japan, and we are doing our utmost to protect national interests,” Yeo said.

The prolonged talks have heightened calls for countermeasures, particularly as Korea’s steel industry struggles under a 50 percent U.S. tariff.

Steel products are seen piled up at a port in Pyeongtaek, Gyeonggi on Aug. 24. [YONHAP]

Visiting Pohang on Friday, Kim met executives of major steelmakers including Posco, Hyundai Steel and Dongkuk Steel, and announced the creation of a new guarantee program worth about 400 billion won ($286.7 million) to support companies in partnership with the financial sector.

Steel was the first sector hit by tariffs under U.S. President Donald Trump’s second administration. In March, Washington imposed 25 percent tariffs on steel and aluminum imports, doubling them to 50 percent in June.

As a result, Korea’s steel exports to the United States fell 15.8 percent in the January to August period to $25.2 billion, compared with $26.5 billion a year earlier.

“We strongly pushed for steel tariff exemptions during negotiations but could not secure them,” said Kim during the meeting with steel industry executives. “We ask for your understanding and we will continue pressing the United States for relief, while strengthening defenses against unfair imports such as rerouted dumping.”

“Through the Steel Industry Competitiveness Task Force launched in January, we are consulting experts and industry representatives,” said an Industry Ministry official. “Based on these discussions and inter-ministerial coordination, we will finalize an ‘industrial upgrade plan’ for the steel sector.”

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 KIM WON [[email protected]]