[fn Plaza] Korea–US Trade Conflict Season 2: How to Respond to a ‘Foretold Future’

The People Power Party has enjoyed what many are calling the "Trump effect." It has benefited from US President Donald Trump’s remark that he would reimpose a 25% reciprocal tariff on Korea. Once the Trump-driven news broke, the usual internal feuds inside the party briefly faded, and for the first time in a while we heard strong criticism focused on livelihood issues, the economy, and foreign affairs instead.
Yoon Hee-sook, former head of the People Power Party’s reform committee, whom I met recently, remarked, "If we had put in even one-tenth of the effort we poured into the second special counsel bill and the Information and Communications Network Act, the ‘Special Act on Strategic Investment Management between Korea and the United States’ would already have passed." She condemned the government–ruling party response after the Korea–US tariff deal as "complacent and irresponsible politics."
In his New Year’s address this year, President Lee Jae-myung highlighted the success of negotiations with the United States. At the time, he said, "It is encouraging that, with the conclusion of the tariff negotiations with the United States, much of the uncertainty weighing on our economy has been resolved."
Barely a month has passed. Washington has suddenly floated the idea of raising the reciprocal tariff rate—previously agreed at 15%—back up. Some say a "Donlo Doctrine"—a blend of Donald Trump and the Monroe Doctrine, putting US interests above all else—is on the rise, but this is a 70‐year‐old alliance, and yet Seoul failed to sense any warning signs.
In reality, there were advance signals that we simply failed to pick up. They included a letter from the Embassy of the United States in Seoul expressing concern over possible discrimination against US digital firms, and the discussion of the Coupang case during a meeting in Washington between Prime Minister Kim Min-seok and US Vice President JD Vance.
The National Assembly also bears heavy responsibility. Even after the two governments released the results of their negotiations on tariffs and security in the form of a Joint Fact Sheet, lawmakers gave the impression that they were dragging their feet on necessary follow-up steps. With volatility persisting in the foreign exchange market, it was as if they were tacitly committing a kind of "attendance violation."
The Special Act on Investment in the United States was not even introduced until late November last year. Until President Trump raised the issue, the bill was effectively gathering dust in the Assembly. Given how crucial the tariff agreement was, this was complacent.
It is at least fortunate that the ruling and opposition parties have belatedly agreed on procedures to pass the special act. The People Power Party has dropped its earlier insistence on requiring parliamentary ratification. Instead, they will form a special committee and handle the bill within a month. Expectations are high for the committee’s first meeting on the 12th. Past mistakes can still be corrected. Yet clearing up the uncertainty surrounding tariff burdens is another matter. Even if the special act passes the National Assembly and reciprocal tariffs are brought back down, can we really say that US trade pressure will be over? If we extrapolate from recent US moves, the areas of conflict are likely to expand. During negotiations, President Trump repeatedly reached for the tariff card. A prime example was when he threatened, then withdrew, a 10% tariff on eight European countries during the Greenland dispute. Non-tariff barriers are another variable. Foreign Minister Cho Hyun, who recently visited the United States and met with Jamieson Greer of the Office of the United States Trade Representative (USTR), noted that Greer raised concerns about Korea’s non-tariff barriers. Regardless of whether the special act passes the Assembly, if there is no progress on issues such as agricultural imports and digital regulation, the two countries could find themselves in a new phase of conflict. We may again be facing not just "25%" but some other figure for reciprocal tariffs. The way Korea carries out its investments in the United States could also become a source of friction. The immediate question is which project will be chosen as the "first case." According to the Joint Fact Sheet, the selection of investment destinations is subject to bilateral "consultation," not a binding "agreement." President Trump has repeatedly sent signals that he expects Korea to participate in the Alaska liquefied natural gas (LNG) development project. However, the Ministry of Trade, Industry and Energy is said to have proposed nuclear power plant projects instead, citing "commercial viability." If conflict becomes a constant, consistency will be crucial. There must be no repeat of the kind of misjudgment we have just seen from the government and political circles. The cooperative mood between the ruling and opposition parties that emerged with their agreement to pass the special act should not end as a one-off event. It needs to be carried through to swift ratification and a steady, unwavering trade strategy. Only when politics is predictable can companies treat tariff shocks as manageable variables. Season 2 of the Korea–US economic conflict is a foretold future. Even Japan, often cited as a "model student" in investment in the United States, is reportedly under fire for delays in its projects. A package strategy that links security and the economy is vital. In this context, National Security Advisor Wi Sung-lac’s recent comment that "as tariffs wavered, security issues such as nuclear-powered submarines were also delayed" deserves attention. It implies that as Washington questions Seoul’s reliability on investment in the United States, follow-up consultations in the security field are also being affected. The economy is now shaking security. And in security, there is no Plan B. Korea must actively use its strengths in semiconductors, shipbuilding, batteries, and nuclear power plants as leverage in negotiations. It needs to reinforce the "irreplaceability" it holds within key supply chains. There is hope that we will see more success stories like "MASGA," the Korea–US shipbuilding cooperation project that was the winning card in the first round of Korea–US negotiations.
mirror@fnnews.com Reporter