Why Trump's Trade War on South Korea May Backfire
U.S. President Donald Trump addresses a crowd of joint service members stationed across the Korean Peninsula during his visit to Osan Air Base, South Korea, June 30, 2019.
U.S. President Donald Trump is aware of the strategic importance of a trilateral security alliance among the U.S., Japan, and South Korea to counter China's ascending power. His administration considers these two Asian countries essential allies for maintaining collective security.
However, his recent foreign policy actions may hinder trilateral cooperation among these allies, as he may put too much pressure on South Korea and Japan.
For example, Trump plans to impose a 25 percent tariff on imported goods from South Korea if he does not secure a favorable trade agreement by August 1. He is also demanding a significant bump in South Korea's share of the costs for hosting U.S. troops stationed near Seoul and an increase in the country's annual military expenditures.
While these demands aim to advance U.S. interests, they could unintentionally destabilize South Korea's government and drive Lee Jae-myung, the newly elected president, closer to China, the most formidable U.S. rival.
Currently, the negative ramifications of Trump's arm-twisting are minimal, as Lee is making every effort to meet Trump's demands. Well aware of the crucial role the U.S. plays in South Korea's security, Lee has dispatched all his top staff members to negotiate with their U.S. counterparts. He hopes to finalize a deal with Trump at a summit meeting as quickly as possible.
During his first term, Trump persuaded South Korea to reduce its economic engagement with China, which had been its most beneficial trading partner.
Seoul's foreign policy used to aim to strengthen national security with the support of the U.S. military, while simultaneously fostering economic growth through cooperation with China. Interestingly, the substantial trade revenues generated from China enabled Seoul to acquire additional military assets from the U.S., such as fighter jets and Apache attack helicopters.
However, Trump disapproved of Seoul's close economic ties with Beijing and pressured the South Korean government to decrease its trade with China. In response, Seoul favorably adjusted its trade volume.
Trump appeared to have won, as South Korea has recorded a trade deficit with China since 2023. Additionally, as of 2025, South Korea's exports to China have become comparable to its exports to the U.S.
In other words, since the late 2010s, Seoul has sacrificed a substantial amount of trade profit from China to cherish its long-term friendship with Washington.
With the start of his second term, Trump's foreign policy agenda has shifted its focus toward addressing the trade deficit with South Korea, rather than enhancing the trilateral security arrangement. This shift is understandable, considering that the U.S. goods trade deficit with South Korea reached $66 billion in 2024, marking a 29.2 percent increase since 2023.
Nevertheless, as Seoul attempts to address the trade imbalance with the U.S. to meet Washington's demands, it is experiencing a notable decline in national revenue. The initial blow came from the decrease in trade revenue with China – another of Trump's demands. If Seoul encounters further economic losses, it may struggle to maintain its purchases of U.S. weapons, cover the additional defense costs for U.S. Forces Korea, and raise its overall military expenditures.
Furthermore, Trump's high tariffs could destabilize the new South Korean government. The opposition could portray any resulting economic trouble as a failure on Lee's part to protect national interests. They might also present any discord with Trump as evidence of Lee's incompetence in foreign policymaking.
Growing domestic opposition may prompt Lee, who is left-leaning and pragmatic, to seek to reduce South Korea's dependence on the dollar for international trade and re-establish close ties with China, which had previously provided significant trade benefits for South Korea.
Lee's outreach to China could gain momentum if the trade dispute reignites anti-American sentiment among his left-leaning supporters. Anti-Americanism was a serious concern in the late 1980s and early 1990s, with many Koreans chanting 'Yankee go home' during street protests in response to what they saw as U.S. interference in South Korea's domestic politics.
If Lee cannot reach acceptable trade terms with Trump at a summit before September 3, he will likely meet with Chinese President Xi Jinping first. September 3 marks the 80th anniversary of China's Victory Day, commemorating Japan's surrender after its defeat by the U.S. in the Pacific War. Xi has invited Lee to the Victory Day celebrations; then-South Korean President Park Geun-hye had attended the 70th anniversary event back in 2015.
If Lee accepts Xi's invitation before having a face-to-face conference with Trump, this would break tradition, as newly elected South Korean presidents typically meet with the U.S. president first. If Lee and Xi celebrate together in Beijing this September, the world will likely speculate that the U.S. is losing its key Asian ally to China.
To avoid this unfavorable scenario, Trump should refrain from imposing excessive burdens on South Korea. After all, Seoul has consistently upheld a free trade agreement with the U.S. for over a decade, demonstrating good faith.
Additionally, South Korea has a long history of supporting the United States' global leadership. The country fought alongside American forces in the Vietnam War and the Gulf War, has been one of the largest importers of U.S. weapons, and hosts the United States' largest overseas military base, the home of U.S. Forces Korea.
In sum, strengthening the security alliance with South Korea while easing trade tensions with Lee would better align with the national interests of the United States.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yomiuri Shimbun
an hour ago
- Yomiuri Shimbun
Trump and Powell Bicker over Fed Building Renovations as President Ratchets up Pressure Campaign
WASHINGTON (AP) — After months of criticizing Federal Reserve Chair Jerome Powell, President Donald Trump took the fight to the Fed's front door on Thursday, publicly scorning the central bank chief over the ballooning costs of a long-planned building project. Powell pushed back, challenging the president's latest price tag as incorrect. Wearing hard hats and grim faces, standing in the middle of the construction project, Trump and Powell addressed the assembled TV cameras. Trump charged that the renovation would cost $3.1 billion, much higher than the Fed's $2.5 billion figure. Powell, standing next to him, shook his head. The Fed chair, after looking at a paper presented to him by Trump, said the president was including the cost of renovating a separate Fed building, known as the Martin building, that was finished five years ago. The visit represented a significant ratcheting up of the president's pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government's interest payments. Presidents rarely visit the Fed's offices, though they are just a few blocks from the White House, an example of the central bank's independence from day-to-day politics. 'We have to get the interest rates down,' Trump said later after a short tour, addressing the cameras this time without Powell. 'People are pretty much unable to buy houses.' Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signaled they will likely keep their key rate unchanged at about 4.3%. However, economists and Wall Street investors expect the Fed may start cutting rates in September. The Federal Reserve sets a short-term interest rate that influences other borrowing costs, such as mortgages, auto loans and credit card rates. Yet the Fed doesn't directly control those other rates, which are ultimately set in financial markets. Last September, when the Fed cut its rate a half-point, mortgage rates actually rose in response. Trump did step back a bit from some of his recent threats to fire Powell before his term ends May 26. Asked if the rising costs of the Fed's renovation, estimated in 2022 to cost $1.9 billion, was a 'fireable offense,' Trump said, 'I don't want to put this in that category.' 'To do that is a big move, and I don't think that's necessary,' Trump added. 'I just want to see one thing happen, very simple: Interest rates come down.' And on his Truth Social site, Trump said, 'The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything — Even the cost of this building!' The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, bragged about his own lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings. Journalists get rare tour of Fed renovation On Thursday, reporters wound through cement mixers, front loaders and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed's historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington. Fed staff, who declined to be identified, said that greater security requirements, rising materials costs and tariffs, and the need to comply with historic preservation measures drove up the cost of the project, which was budgeted in 2022 at $1.9 billion. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. He increased them this year to 50%. Steel prices are up about 60% since the plans were approved, while construction materials costs overall are up about 50%, according to government data. The staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called 'progressive collapse,' in which only parts of the building would fall if hit with explosives. Sensitivity to the president's pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed's boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written 'oval office' on plywood walls. The Fed staff downplayed the inscription as a joke. When reporters returned to the room later, it had been painted over. During the tour, Fed staff also showed the elevator shaft that congressional critics have said is for 'VIPs' only. Powell has since said it will be open to all Fed staff. The renovation includes an 18-inch (45-cm) extension so the elevator reaches a slightly elevated area that is now accessible only by steps or a ramp. A planning document that said the elevator will only be for the Fed's seven governors was erroneous and later amended, staff said. Renovations have been in the works for a while Plans for the renovation were first approved by the Fed's governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump's appointees derided as a 'glass box.' Fed staff also pointed to the complication of historic renovations — both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper, they said. As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic. Trump, who said after his tour that 'it feels very good to be back on a construction site,' added that opening up a basement is 'the most expensive place to build.' The Fed has previously attributed much of the project's cost to underground construction. It is also adding three underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington, D.C.'s height restrictions, forcing more underground construction.
The Mainichi
2 hours ago
- The Mainichi
Trump's order to block 'woke' AI in government encourages tech giants to censor their chatbots
(AP) -- Tech companies looking to sell their artificial intelligence technology to the federal government must now contend with a new regulatory hurdle: prove their chatbots aren't "woke." President Donald Trump's sweeping new plan to counter China in achieving "global dominance" in AI promises to cut regulations and cement American values into the AI tools increasingly used at work and home. But one of Trump's three AI executive orders signed Wednesday -- the one "preventing woke AI in the federal government" -- also mimics China's state-driven approach to mold the behavior of AI systems to fit its ruling party's core values. Several leading providers of the AI language models targeted by the order -- products like Google's Gemini, Microsoft's Copilot -- have so far been silent on Trump's anti-woke directive, which still faces a study period before it gets into official procurement rules. While the tech industry has largely welcomed Trump's broader AI plans, the anti-woke order forces the industry to leap into a culture war battle -- or try their best to quietly avoid it. "It will have massive influence in the industry right now," especially as tech companies "are already capitulating" to other Trump administration directives, said civil rights advocate Alejandra Montoya-Boyer, senior director of The Leadership Conference's Center for Civil Rights and Technology. The move also pushes the tech industry to abandon years of work to combat the pervasive forms of racial and gender bias that studies and real-world examples have shown to be baked into AI systems. "First off, there's no such thing as woke AI," she said. "There's AI technology that discriminates and then there's AI technology that actually works for all people." Molding the behaviors of AI large language models is challenging because of the way they're built. They've been trained on most of what's on the internet, reflecting the biases of all the people who've posted commentary, edited a Wikipedia entry or shared images online. "This will be extremely difficult for tech companies to comply with," said former Biden official Jim Secreto, who was deputy chief of staff to U.S. Secretary of Commerce Gina Raimondo, an architect of many of Biden's AI industry initiatives. "Large language models reflect the data they're trained on, including all the contradictions and biases in human language." Tech workers also have a say in how they're designed, from the global workforce of annotators who check their responses to the Silicon Valley engineers who craft the instructions for how they interact with people. Trump's order targets those "top-down" efforts at tech companies to incorporate what it calls the "destructive" ideology of diversity, equity and inclusion into AI models, including "concepts like critical race theory, transgenderism, unconscious bias, intersectionality, and systemic racism." For Secreto, the order resembles China's playbook in "using the power of the state to stamp out what it sees as disfavored viewpoints." The method is different, with China relying on direct regulation through its Cyberspace Administration, which audits AI models, approves them before they are deployed and requires them to filter out banned content such as the bloody Tiananmen Square crackdown on pro-democracy protests in 1989. Trump's order doesn't call for any such filters, relying on tech companies to instead show that their technology is ideologically neutral by disclosing some of the internal policies that guide the chatbots. "The Trump administration is taking a softer but still coercive route by using federal contracts as leverage," Secreto said. "That creates strong pressure for companies to self-censor in order to stay in the government's good graces and keep the money flowing." The order's call for "truth-seeking" AI echoes the language of the president's one-time ally and adviser Elon Musk, who frequently uses that phrase as the mission for the Grok chatbot made by his company xAI. But whether Grok or its rivals will be favored under the new policy remains to be seen. Despite a "rhetorically pointed" introduction laying out the Trump administration's problems with DEI, the actual language of the order's directives shouldn't be hard for tech companies to comply with, said Neil Chilson, a Republican former chief technologist for the Federal Trade Commission. "It doesn't even prohibit an ideological agenda," just that any intentional methods to guide the model be disclosed, said Chilson, who is now head of AI policy at the nonprofit Abundance Institute. "Which is pretty light touch, frankly." Chilson disputes comparisons to China's cruder modes of AI censorship. "There is nothing in this order that says that companies have to produce or cannot produce certain types of output," he said. "It says developers shall not intentionally encode partisan or ideological judgments. That's the exact opposite of the Chinese requirement." So far, tech companies that have praised Trump's broader AI plans haven't said much about the order. OpenAI on Thursday said it is awaiting more detailed guidance but believes its work to make ChatGPT objective already makes the technology consistent with what the order requires. Microsoft, a major supplier of email, cloud computing and other online services to the federal government, declined to comment Thursday. Musk's xAI, through spokesperson Katie Miller, a former Trump official, pointed to a company comment praising Trump's AI announcements as a "positive step" but didn't respond to a follow-up question about how Grok would be affected. Anthropic, Google, Meta, and Palantir didn't immediately respond to emailed requests for comment Thursday. AI tools are already widely used in the federal government, according to an inventory created at the end of Biden's term. In just one agency, U.S. Health and Human Services, the inventory found more than 270 use cases, including the use of commercial generative AI platforms such as ChatGPT and Google Gemini for internal agency support to summarize the key points of a lengthy report. The ideas behind the order have bubbled up for more than a year on the podcasts and social media feeds of Sacks and other influential Silicon Valley venture capitalists, many of whom endorsed Trump's presidential campaign last year. Much of their ire centered on Google's February 2024 release of an AI image-generating tool that produced historically inaccurate images before the tech giant took down and fixed the product. Google later explained that the errors -- including one user's request for American Founding Fathers that generated portraits of Black, Asian and Native American men -- was the result of an overcompensation for technology that, left to its own devices, was prone to favoring lighter-skinned people because of pervasive bias in the systems. Trump allies alleged that Google engineers were hard-coding their own social agenda into the product, and made it a priority to do something about it. "It's 100% intentional," said prominent venture capitalist and Trump adviser Marc Andreessen on a podcast in December. "That's how you get Black George Washington at Google. There's override in the system that basically says, literally, 'Everybody has to be Black.' Boom. There's squads, large sets of people, at these companies who determine these policies and write them down and encode them into these systems." Sacks credited a conservative strategist for helping to draft the order. "When they asked me how to define 'woke,' I said there's only one person to call: Chris Rufo. And now it's law: the federal government will not be buying WokeAI," Sacks wrote on X.
Nikkei Asia
3 hours ago
- Nikkei Asia
Trump presses Powell to cut rates during tense visit to Fed
WASHINGTON (Reuters) -- President Donald Trump locked horns with Federal Reserve Chair Jerome Powell during a rare presidential visit to the U.S. central bank on Thursday, criticizing the cost of renovating two historical buildings at its headquarters and pressing the case for lower interest rates. Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, wrapped up his visit to the Fed's $2.5 billion building project in Washington by saying he did not intend to fire Powell, as he has frequently suggested he would. "To do so is a big move and I just don't think it's necessary," Trump told reporters after the visit. In a post on his Truth Social media site, Trump later said of the renovation, "it is what it is and, hopefully, it will be finished ASAP. The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything." The visibly tense interaction at the Fed's massive construction site marked an escalation of White House pressure on the central bank and Trump's efforts to get Powell to "do the right thing" on rates. It happened less than a week before the central bank's 19 policymakers are due to gather for a two-day rate-setting meeting, where they are widely expected to leave their benchmark interest rate in the 4.25%-4.5% range. The president has repeatedly demanded that Powell slash rates by 3 percentage points or more. "I'd love him to lower interest rates," Trump said as he wrapped up the tour, as Powell stood by, his face expressionless. Powell typically spends the Thursday afternoon before a rate-setting meeting doing back-to-back calls with Fed bank presidents as part of his preparations for the session. His encounter with the president became heated as Trump told reporters the project was now estimated to cost $3.1 billion. "I am not aware of that," Powell said, shaking his head. Trump handed him a piece of paper, which Powell examined. "You just added in a third building," the Fed chief said, noting that the Martin Building had been completed five years ago. White House budget director Russell Vought and Trump's deputy chief of staff, James Blair, who have spearheaded criticism of the renovation as overly costly and ostentatious, later told reporters they still have questions about the project. The two men, who joined Trump during the visit, have suggested poor oversight and potential fraud in connection with it. Senate Banking Committee Chair Tim Scott, a Republican who sent Powell a letter on Wednesday demanding answers to his own questions about the renovation, also took part in the visit. Elevated by Trump to the top Fed job in 2018 and then reappointed by former President Joe Biden four years later, Powell last met with the current president in March when Trump summoned him to the White House to press him to lower rates. The visit on Thursday took place as Trump battles to deflect attention from a political crisis over his administration's refusal to release files related to convicted sex offender Jeffrey Epstein, reversing a campaign promise. Epstein died in 2019. The Fed, in letters to Vought and lawmakers backed up by documents posted on its website, said the project -- the first full rehab of the two buildings since they were built nearly a century ago -- ran into unexpected challenges, including toxic materials abatement and higher-than-estimated costs for materials and labor. Speaking outside of the construction site, Trump said there was "no tension" at his meeting with Powell and that they had a productive conversation about rates. Ahead of Trump's visit, Fed staff escorted a small group of reporters around the two construction sites. They wove around cement mixers and construction machines, and spoke over the sound of drills, banging and saws. Fed staff pointed out security features, including blast-resistant windows, that they said were a significant driver of costs in addition to tariffs and escalations in material and labor costs. The project started in mid-2022 and is on track to be completed by 2027, with the move-in planned for March 2028. A visit to the roof of the Eccles Building, a point of particular scrutiny by critics like Scott, who has complained about "rooftop garden terraces," revealed an impressive view of the Lincoln Memorial and the National Mall, according to the pool report. Staff explained that rooftop seating, although inexpensive, had been removed because of the appearance of it being an amenity and was one of only two deviations from the original plan. The other was the scrapping of a couple of planned fountains. Market reaction to Trump's visit was subdued. The yield on benchmark 10-year Treasury bonds ticked higher after data showed new jobless claims dropped in the most recent week, signaling a stable labor market not in need of support from a Fed rate cut. The S&P 500 equities index closed largely flat on the day. Trump's criticism of Powell and flirtation with firing him have previously upset financial markets and threatened a key underpinning of the global financial system -- that central banks are independent and free from political meddling. His trip contrasts with a handful of other documented presidential visits to the Fed. Then-President Franklin Delano Roosevelt visited the central bank in 1937 to dedicate the newly built headquarters, one of the two buildings now being renovated. Most recently, former President George W. Bush went there in 2006 to attend the swearing-in of Ben Bernanke as Fed chief.
