[Editorial] Tariff pause, strategic push

Korea Herald

15-05-2025

A 90-day pause of the US-China tariff fight demands strategy, not complacency, from Korea
The US and China — the world's two largest economies — agreed Monday to a 90-day suspension of their escalating tariff war, reducing duties from a punishing 145 percent to 30 percent on US imports from China, and from 125 percent to 10 percent in the reverse direction.
While this temporary truce may ease immediate pressure, it offers no resolution. For South Korea, the implications are complex — a brief opening and a sharp warning.
South Korea, whose economy is built on export-led growth, is deeply tethered to the economic and geopolitical spheres of both Washington and Beijing. The 90-day pause, which began Wednesday and runs through mid-August, offers a narrow but critical window for Seoul to recalibrate its trade strategy. The goals must be clear: reduce the burdensome 25 percent reciprocal tariffs, and secure exemptions for key export items such as automobiles and steel.
This is not a moment to simply ride out the storm. It is a chance to shape a long-term road map for resilience in an increasingly fractured global economy.
Despite some initial optimism, the truce does not reflect any fundamental thaw in US-China trade relations. The rollback is modest and highly conditional. Key US tariffs remain in place, and a 'default' 10 percent duty continues to apply across other bilateral agreements, even with allies like Britain and Japan.
Such precedents are telling. Under US President Donald Trump's transactional foreign policy, tariff relief is not freely given. It must be earned through visible, often strategic, concessions. Trump's comment on May 9 that the US might offer 'something special' to certain allies makes the stakes plain: Trade exemptions will come only to those who meet Washington's demands.
South Korea's task now is to pursue sector-specific relief and push for exemptions or reductions on targeted exports. To build negotiating leverage, Seoul could offer cooperation in key industries such as shipbuilding and energy, as well as alignment with US export controls aimed at China.
What complicates the outlook is the country's heavy dependence on trade. Exports accounted for 36.3 percent of gross domestic product last year and are already under strain. In April, shipments to the US dropped 6.8 percent on-year to $10.6 billion, narrowing Korea's trade surplus with Washington by $900 million. In just the first 10 days of May, the decrease widened to a stunning 30.4 percent, driven in part by market uncertainty tied to tariff threats.
This is more than a temporary slump. On Wednesday, the state-run Korea Development Institute slashed its 2025 growth outlook from 1.6 percent to a mere 0.8 percent. The downgrade reflects not just the drag of American protectionism but also the country's deeper vulnerability: weak domestic demand that leaves little room for economic maneuver.
Compounding the challenge is South Korea's presidential election, set for June 3. The transitional period always carries a degree of political inertia. But this is no time for delay. The incoming administration will need to move quickly to navigate turbulent diplomatic waters and competing domestic priorities with urgency and clarity.
Beyond short-term relief, South Korea must look ahead. Investment in critical technology sectors — increasingly exposed to geopolitical tension — is essential. Diversifying trade routes and strengthening regional partnerships, especially through multilateral platforms like APEC, will be vital to weather the storm of rising global protectionism.
The 90-day pause in the US-China tariff fight is not a reprieve. It is a countdown. Seoul must seize this opportunity to redefine its trade strategy, assert its economic interests and ensure that when tariffs return — as they likely will — it is ready.