South Korea Seeks To Be Excluded From Tariffs

South Korea seeks an exemption from planned U.S. steel and aluminum tariffs, citing strong economic ties and existing trade agreements.

Quick Takes

South Korea has asked for an exemption from the planned 25% U.S. tariffs on steel and aluminum.
Deputy Trade Minister Park Jong-won met with U.S. officials in Washington.
South Korean firms invested $21.5 billion in U.S. projects in 2023.
The planned tariffs could significantly impact South Korea’s trade-dependent economy.
South Korea emphasizes the existing free trade agreement and low import duties on American products.

South Korea Appeals for Tariff Exemption

South Korea has officially requested an exemption from the plans for U.S. tariffs on steel and aluminum imports. Deputy Trade Minister Park Jong-won traveled to Washington to meet with officials from the White House, Department of Commerce, and Office of the U.S. Trade Representative. The South Korean government is emphasizing the strong economic ties between the two nations and the existing free trade agreement as justification for the exemption.

Park highlighted South Korean investments in the U.S., which reached a record $21.5 billion in 2023, making South Korea the top global investor in the United States. These investments were largely driven by the Biden administration’s CHIPS Act, aimed at reducing reliance on China and incentivizing semiconductor and clean energy manufacturing in the U.S.

SOUTH KOREA DELEGATION REQUESTS EXEMPTION FROM U.S. RECIPROCAL, STEEL AND ALUMINUM TARIFFS -INDUSTRY MINISTRY

— CGTN America (@cgtnamerica) February 20, 2025

Economic Impact and Trade Relations

The proposed tariffs have raised concerns about their potential impact on South Korea’s economy. The Korea Development Institute has already lowered the country’s economic growth forecast from 2.0% to 1.6% due to weak domestic demand and slowing exports. While the steel and aluminum tariffs alone might not significantly affect South Korea, potential increases in duties on semiconductors and cars could harm its trade-dependent economy.

South Korea’s trade surplus with the U.S. reached a record $55.7 billion last year, with low average tariff rates on U.S. imports. Deputy Minister Park emphasized that under the existing Korea-U.S. Free Trade Agreement, tariffs on most items have already been eliminated, arguing for the continuation of this mutually beneficial arrangement.

Major South Korean Investments in the U.S.

South Korean companies have made significant investments in the United States, demonstrating their commitment to the bilateral economic relationship. Notable projects include Samsung’s semiconductor factory in Texas and Hyundai’s electric vehicle plant in Georgia. These investments align with U.S. goals to strengthen domestic manufacturing capabilities in critical sectors.

South Korea’s steel industry, already under pressure from oversupply and decreased global demand, could face additional challenges if U.S. tariffs are implemented. There are concerns that Chinese steel might be redirected to other markets, further complicating the situation for South Korean producers.

Government Response and Future Negotiations

South Korea’s acting president, Choi Sang-mok, has convened a meeting to discuss the potential impact of U.S. trade measures. Officials have been instructed to study responses from other major economies and to communicate South Korea’s position effectively to U.S. officials. The government is proposing high-level consultations to discuss cooperation and minimize damage from protectionist trade policies.

As negotiations continue, both countries will need to navigate the complex landscape of international trade, balancing economic interests with strategic partnerships. The outcome of these discussions could have significant implications for the future of U.S.-South Korea trade relations and the broader global economic order.