Despite South Korea’s requests, the United States remains firm, with car manufacturers still facing a 25% tariff burden. This is interpreted as the U.S. employing a delaying strategy to pressure South Korea for investment. In contrast, the EU has formalized its agreements with the U.S. through a joint statement.
During the U.S.-Korea summit, the Korean government tried to document the U.S.-Korea trade agreement reached last month but failed to yield results. This outcome appears to be influenced by the U.S.’s strategy to secure as much investment as possible from Korea and to gain an advantageous position in defense cost-sharing negotiations.
According to government officials on the 27th, both countries held over ten meetings for a joint statement and a “fact sheet” announcement following the summit but failed to reach an agreement. The Korean government requested the U.S. to formalize promises made in the previous trade agreement, such as reducing car tariffs and granting most-favored-nation treatment for semiconductors and pharmaceuticals. However, the U.S. reportedly took a cautious stance.
The U.S.’s delay in formalizing the agreements is seen as a negotiation tactic, particularly since South Korea promised $350 billion in U.S. investments. Discrepancies between the U.S. and South Korea have emerged regarding the composition and operation of these investments. The U.S. stated that the investments stem from directives by President Donald Trump and that 90% of future profits will go to the U.S. However, the Korean government insists that this should be understood as a reinvestment.
The ongoing detailed discussions mean that any easing of tariff barriers for Korean companies could be delayed. Despite an agreement to lower car export tariffs between the two countries to 15%, companies still bear a 25% tariff since there are no documented clauses for U.S. customs to apply.
Other countries are formalizing their trade agreements with the U.S. On the 21st, the U.S. and the European Union (EU) documented their trade agreement in a joint statement. It guarantees that the final tariffs on EU pharmaceuticals and semiconductors will not exceed 15%. Additionally, if the EU legislates tariff reductions on U.S. imports, the U.S. will apply a 15% tariff on European cars and car parts.