Korea's role to help boost US economy should be honored
U.S. President Donald Trump has once again sparked controversy with his announcement to impose reciprocal tariffs on all imports, including cars, beginning in April. This decision, part of his broader tariff strategy, raises concerns about its potential impact on Korea's domestic industries. As Trump escalates his trade war against various countries, including close allies, it is crucial for both the U.S. and Korea to adopt strategic measures that can mitigate the adverse effects on key sectors, particularly the car industry. The U.S. must also consider the vital role Korean firms have played in contributing to the growth of the U.S. economy, especially through investment.
The imposition of high tariffs on imports from Korea would hit the country’s automotive sector particularly hard, as it is the country's largest export industry. In 2024, Korea exported $36.6 billion worth of cars to the U.S., while the U.S. exported just $2.1 billion to Korea. This significant trade surplus has long been a point of contention between the two nations. Given the U.S. government’s focus on reducing trade deficits, it is highly likely that the imposition of reciprocal tariffs would target Korean cars, severely disrupting an industry that is a cornerstone of the Korean economy.
The U.S. government’s decision, outlined in a memorandum signed by Trump on Feb. 13, complicates matters further. The memorandum specifies that reciprocal tariffs will be applied on April 2 in response to nontariff barriers, taxation policies and foreign exchange practices that the U.S. deems unfair. While the U.S. aims to protect its domestic industries and address what it perceives as trade imbalances, it risks exacerbating tensions with longstanding allies like Korea.
The Korean government must take immediate action to minimize the damage to its industries, especially in the face of these looming tariffs. It is essential that Korea carefully navigates the complex landscape of U.S. trade policy by identifying the nontariff barriers that are likely to become points of contention and formulating targeted diplomatic strategies. The Korean government must avoid excessive engagement in the foreign exchange market, as the U.S. has already placed Korea on its watch list for foreign reserves. Furthermore, the Fair Trade Commission should implement fair policies that ensure U.S. tech companies are not treated unfairly in Korea, as the U.S. Trade Representative has made it clear that it will not tolerate discriminatory actions against U.S. firms.
However, while the Korean government works to shield its industries from the impact of the tariff war, the U.S. must also recognize the positive contributions that Korean companies have made to the U.S. economy. Far from being a one-way trade street, Korean firms have been significant investors in the U.S., supporting economic growth and job creation. According to data from the Korea International Trade Association, 78.5 percent of the trade surplus that Korea generated with the U.S. between 2017 and 2024 has been reinvested in the U.S. This makes Korea one of the largest foreign investors in the U.S., particularly in greenfield investments, which have been substantial in recent years. In fact, Korea has been the largest greenfield investor in the U.S. for two consecutive years (2023 and 2024).
This strong track record of investment underscores the importance of a balanced approach to trade between the U.S. and Korea. It is crucial that U.S. policymakers do not overlook the broader economic benefits of Korean investments, which include creating jobs, stimulating innovation and fostering mutual economic growth. As such, the U.S. must adopt a more measured stance in its approach to tariffs, recognizing that Korea’s contributions to its economy are substantial and deserving of respect.
To ensure that the trade relationship remains mutually beneficial, high-level dialogues between U.S. and Korean officials are critical. In this regard, representatives from the Korean government began their visit to the U.S. on Monday and leaders of major conglomerates, including SK Group Chairman Chey Tae-won, will visit the U.S. on Feb. 19 and 20 to discuss key issues and strengthen bilateral ties in industries such as shipbuilding, energy, nuclear power, defense and semiconductors. These discussions should aim to find common ground on contentious trade matters while also expanding opportunities for cooperation in emerging sectors.
Both the U.S. and Korea must adopt a strategic approach to navigating the current trade tensions. While the imposition of tariffs may be a tool for the U.S. to protect its domestic industries, it is essential that it takes into account Korea’s significant contributions to its economy through investment. A cooperative and diplomatic resolution to these trade issues will benefit both nations and contribute to a more stable global economic landscape.
English (United States) ·