Last-Chance Negotiations...The 4 Days That Will Decide ‘Export Korea’s’ Fate

Korea–US Tariff Negotiation Deadline D-4

Yoon-chul Koo & Scott Besant to Hold Final Talks This Week

Only Two Days for Substantive Talks: The 30th and 31st

"High Tariffs Would Directly Hit the Economy"

Deputy Prime Minister and Minister of Economy and Finance Yoon-chul Koo will meet with US Treasury Secretary Scott Besant on either the 30th or 31st in the United States to hold last-minute tariff negotiations that are crucial for the fate of Korean manufacturing. This is a classic 'brinkmanship negotiation' with the US set to impose a 25% reciprocal tariff on August 1, an imminent threat.

According to the Ministry of Economy and Finance and other sources on the 27th, the US side has proposed holding a Korea–US treasury ministers' trade meeting between Deputy Prime Minister Koo and Secretary Besant this week. It is reported that a meeting on the 31st, the day before tariffs take effect, is most likely. Secretary Besant abruptly postponed the originally scheduled 'Korea–US 2+2 (Treasury + Trade Ministers) trade meeting' on the 25th by one day at the last minute.

It now seems that Korea may be the last major country left negotiating. Japan settled its talks on the 22nd, and the European Union (EU) will negotiate on the 27th, as Ursula von der Leyen, President of the European Commission, meets with US President Donald Trump. On the 28th and 29th in Sweden, a high-level US–China trade meeting is set to take place with Secretary Besant in attendance.

The government plans to leverage all channels for negotiations in the remaining period, using Korea–US manufacturing cooperation—especially in shipbuilding and semiconductors—as a bargaining chip, since the US aims to revive domestic manufacturing through the tariff war. Minister of Trade, Industry and Energy Jeong-gwan Kim and Han-koo Yeo, Deputy Minister for Trade Negotiations, are staying continuously in the US for ongoing negotiations. On the 25th, Minister Kim even continued talks late into the night at the New York home of Secretary Howard Lutnick.

Experts warn that if negotiations fail and the US imposes the forecasted high reciprocal tariff (25%), Korea’s export-driven economy could rapidly weaken in the second half of the year. They advise that now is the time to use every possible card, from manufacturing cooperation to further opening of the beef and rice markets.

To Avoid the Worst-Case Tariff: "Emphasize Korea’s Contribution to US Manufacturing Revival with Semiconductors & Shipbuilding"

Tariff Negotiations Down to the Wire

US Treasury Secretary Scott Besant wrote on X (formerly Twitter) on the 26th: "President Trump's economic miracle can be summed up as ABC." He claimed that the America First (A) policy led to a Blue Color boom, and a revival in capital expenditures (Capex) ushered in a new golden age. The purpose of the tariff war, he made clear, is to revive US manufacturing. As Korea fights for its interests in last-minute negotiations with only four days before the tariffs take effect, experts advise a reverse strategy of leveraging manufacturing as the greatest negotiating tool. Korea, they argue, must stress its unique contribution to the manufacturing hegemony the US seeks to regain in order to reduce the tariff rate.

25% Worst-Case Tariff Scenario for Manufacturing Becomes Reality

According to the National Assembly Budget Office on the 27th, manufacturing accounted for 27.6% of Korea’s GDP in 2023—the second highest among OECD nations, following Ireland (31.0%) and ahead of traditional manufacturing powerhouses Germany (20.1%) and Japan (20.7%).

Given the size of manufacturing and Korea’s heavy export dependence on the US (18.8% in 2024), the impact would be severe if the reciprocal tariff is implemented. Professor Jeong Heo, president of the Korea International Trade Association and a professor at Sogang University, warned, "If negotiations collapse and more than 25% reciprocal tariffs are imposed, exports in the second half of the year could immediately drop by around 20–30 billion dollars. If tariffs continue through next year, the economic growth rate could fall by 0.5 percentage points."

Experts emphasize that to strike a deal, the US should fully recognize Korea’s existing investments, such as Hyundai's Metaplant ($21 billion), and Korea should approach non-tariff barriers, like opening the agricultural market, more flexibly.

There are also calls to increase Korea-US investment packages from over $100 billion (+α) even further. Professor Heo said, "The best outcome would be to cut the tariff rate to Japan’s 15% level, but it may be necessary to propose increasing market-opening and bumping up investment in the US from $100 billion to around $300 billion."

Professor Tae-hwang Kim of Myongji University’s Department of International Trade commented, "Hyundai, Samsung, and Hynix’s new investment announcements should be fully recognized, and all measures prepared in meetings with President Jae-myung Lee and the heads of the four major groups must be utilized." He advised, "For items with small, limited import volumes—like potatoes, soybeans, and pork—a promise to open the market should be made."

Manufacturing—Especially Shipbuilding—Must Be Leveraged

Some experts propose a new approach: combining Korea-US investment funds with manufacturing cooperation. Former Ambassador for Economic Affairs Seok-young Choi (Advisor at Law Firm Kwangjang) pointed out, "Looking at Japan’s $550 billion investment pledge to the US, it’s clear the areas the US wants are semiconductors, batteries, electric vehicles, and shipbuilding—all fields where Korea is strong." He added, "If we make a promise (for US investment), the priority should be to meet what the US wants, even more than our own interests."

The US has designated areas such as modernization of its shipbuilding industry—via the US-Japan co-investment framework—development of new LNG, modernization of the energy grid, semiconductor manufacturing and research, and investment in critical minerals used in batteries and electronics. Byung-il Choi, advisor for international trade at Pacific, suggested, "We should build an investment package in line with the direction of US-led supply chain reorganization. When creating an investment fund, it should ensure the US stays involved, not just Korea, and we need to minimize mechanisms like ‘snapback’ (automatic cancellation if promises are unfulfilled) that the US mentions."

In these final negotiations, shipbuilding—where Korea is strong—may become the biggest point of leverage. After an emergency meeting on Korea–US trade response, the Office of the President announced that "the US side showed great interest in the shipbuilding sector, and we will work out mutually agreeable solutions." Ahead of these talks, the government, together with the ‘Big Three’ Korean shipbuilders (HD Hyundai, Hanwha Ocean, Samsung Heavy Industries), has drawn up cooperative plans focusing on workforce training, technology transfer, and construction of US vessels in Korea.

Daehun Kim / Jeongmin Nam / Jieun Ha daepun@hankyung.com