[Gangnam Perspective] The United States–Korea Tariff Negotiations Demand Vigilance Until the End

Marking its sixth month in office, the Lee Jae-myung administration has begun to share the diplomatic achievements it has made so far. The administration has announced its intention to share these successes not only with large corporations, but also with small and medium-sized enterprises, venture businesses, and the general public. This was discussed at a senior aides’ meeting at the Office of the President of South Korea on the 24th of last month, during President Lee Jae Myung’s absence due to his overseas trip to the Middle East and Africa.
The Office of the President of South Korea stated that the outcomes of the United States–Korea Tariff Negotiations and the confirmed introduction of 260,000 of the latest graphics processing units (GPUs) are the result of joint efforts by the government, businesses, and the public, not just individual companies. The administration emphasized its commitment to sharing these achievements.
However, the public remains uncertain about what tangible benefits they will receive. Instead, there is growing concern about the enormous financial burden that will result from large-scale investments in the United States of America (USA) and increased security expenditures, which are expected to lead to higher taxes.
Global negotiations are always a matter of strict give-and-take, with no side gaining everything unilaterally. The United States–Korea Tariff Negotiations under the Lee Jae-myung administration are no exception. The total payments that must be made during the administration’s tenure as a result of these agreements are estimated to approach 600 trillion won.
First, as a result of the United States–Korea Tariff Negotiations, investments in the USA totaling $350 billion (514 trillion won) will be made over the next five years. In the area of security, Korea will also be required to pay 83 trillion won. This includes $25 billion (about 34 trillion won) for the purchase of American military equipment by 2030, $33 billion (48 trillion won) in comprehensive support for United States Forces Korea (USFK), and a separate Special Measures Agreement (SMA) payment of 1.5192 trillion won in 2026.
The government has reportedly reached a consensus with the USA to increase defense spending to 3.5% of Gross Domestic Product (GDP) by 2035, though no specific amount has been disclosed.
The 260,000 GPUs that Jensen Huang, CEO of Nvidia Corporation, promised to supply to Korea are, of course, not free. The government recently received an initial batch of 13,000 GPUs from Nvidia Corporation and allocated a supplementary budget of 1.46 trillion won for payment. Including the volume supplied to the private sector, at least several trillion won in additional foreign currency will be required.
Since these negotiations involve the use of taxpayers’ hard-earned money, it is only natural for the public to want a thorough accounting of the pros and cons of the United States–Korea Tariff Negotiations. The government must do more to reassure citizens who are concerned about the tax burden.
The government has explained that the security-related payments are linked to previously scheduled obligations. Regarding investments in the USA, it expects offsetting effects from tariff reductions. The administration also claims that the quality of the agreements is superior to those achieved by the European Union (EU) or Japan.
Notably, the 260,000 GPUs to be supplied to Korea represent the largest single-country allocation in the world at a time of global shortages. This is expected to help Korea rise to third place globally in Artificial Intelligence (AI) infrastructure, following the USA and China.
The government must also alleviate public anxiety over follow-up negotiations that have yet to be finalized. One of the most significant achievements in the security sector, approval for the construction of a nuclear-powered submarine, still requires passage through the United States Congress (US Congress). In addition, the process of amending the Agreement for Cooperation Between the Government of the Republic of Korea and the Government of the United States of America Concerning Peaceful Uses of Nuclear Energy remains in order to secure nuclear fuel. If President Donald Trump insists on building nuclear-powered submarines at Philly Shipyard in the USA, further complications may arise. Unpredictable variables can always emerge in the diplomatic arena.
Although the automotive tariff rate has been retroactively reduced to 15%, detailed adjustments regarding sensitive items (such as agricultural products and steel) and the scope and schedule of tariff reductions remain to be negotiated.
The entire nation is grateful to the Lee Jae-myung administration and business leaders for their hard work in concluding the United States–Korea Tariff Negotiations despite intense pressure from the USA. Nevertheless, as follow-up working-level negotiations are still pending, it is essential to quickly strengthen Korea’s negotiating position. Encouragement and praise for the working-level negotiation teams should be brief; above all, vigilance must be maintained until the very end. It is premature to celebrate the United States–Korea Tariff Negotiations just yet.
rainman@fnnews.com