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Korea Herald
3 days ago
- Business
- Korea Herald
[Wang Son-taek] Key points for a successful S. Korea-US summit
The upcoming South Korea-US summit scheduled for this month is poised to become a landmark diplomatic event in the history of the alliance — regardless of its outcome. Under President Donald Trump's renewed leadership, the United States is aggressively redrawing the international order. The administration's approach has discarded traditional norms of multilateral cooperation in favor of a transactional, unilateral model. At the heart of this shift is an escalating tariff war. South Korea has also felt the impact. In late July, Seoul and Washington reached a surprising and lopsided agreement: despite the Korea-US Free Trade Agreement, which originally guaranteed tariff-free trade, Korea will now face a 15 percent tariff on exports to the US. This concession was made to reduce Trump's initial demand of a 25 percent tariff. In exchange, Korea agreed to invest $350 billion in the United States and to import $100 billion worth of US energy products. These numbers are staggering. Unsurprisingly, this has shaken confidence in the alliance. Within South Korea, growing embarrassment and frustration have raised questions over whether the alliance is still grounded in mutual respect — or if it has devolved into an asymmetric arrangement driven solely by US pressure. In this context, the upcoming summit between President Lee Jae Myung and President Trump carries immense importance. Ideally, the two leaders would agree on ways to enhance the alliance and reduce uncertainty. But optimism must be tempered. Trump is a notoriously unpredictable figure. Since beginning his second term in January, he has grown even more inflexible in his positions. For many global leaders, meeting with Trump has become a nerve-wracking ordeal. In February, Ukrainian President Volodymyr Zelenskyy experienced a disastrous summit in Washington. During a 40-minute meeting, Trump, and Vice President JD Vance openly cornered Zelenskyy, accusing him of recklessness and dismissing his diplomatic appeals. In May, South African President Cyril Ramaphosa was subjected to a bizarre ambush at the White House. Trump unexpectedly raised unfounded claims about 'white genocide' in South Africa and used misleading footage to pressure Ramaphosa in front of the press. Diplomacy is built on mutual respect and reliable communications. Yet Trump's actions suggest a deliberate strategy of shaming foreign leaders to achieve domestic political gains. While history offers many examples of powerful states bullying weaker ones, Trump's overt and often theatrical humiliations of heads of state are without modern precedent. There is no guarantee that President Lee Jae Myung will be treated differently. Hoping for a summit that yields a comprehensive agreement may be overly ambitious. A successful summit may simply mean that the alliance remains intact and that relations between the two leaders do not fray. To achieve even this limited success, the South Korean government must be thoroughly prepared. First, anticipate Trump's theatricality. Trump has shown a pattern of using summits for spectacle. Some incidents, like the Ramaphosa ambush, were clearly premeditated. To avoid confrontation, South Korea should convey to the White House that there is no reason for hostility between the two sides. Second, while Trump has frequently harassed foreign leaders perceived as weak, he tends to respect strong leaders. He has openly expressed admiration for authoritarian figures like Putin, Xi Jinping and Kim Jong Un. This is not because of ideology, but because he associates strength with authority. President Lee should project confidence and national support — not arrogance, but firm resolve. Any perception that President Lee is weak could prompt Trump to treat him as prey, rather than a peer. Third, remember that Trump is not persuaded by logic — he is influenced by emotion. Many European leaders have learned that flattery often works where facts do not. While sycophancy is distasteful, directly contradicting Trump in public or humiliating him at the negotiating table is unwise. Managing his ego is not appeasement — it is strategic calibration. If a deal is reached, framing it as a product of Trump's leadership will likely help sustain momentum. In fact, this approach should apply in all diplomacy, not just with Trump. But in Trump's case, it is essential. Fourth, Trump thrives in highly orchestrated events where he is center stage and commands international attention. The 2018 Singapore summit with Kim Jong Un is instructive: when Trump perceived the summit as favorable, he was willing to engage and compromise. Similarly, Trump's attitude toward former President Moon Jae-in evolved. While initially skeptical during their first meeting in June 2017, Trump was noticeably more cooperative during the Seoul summit in November that year. In Seoul, Trump reportedly took a strong interest in visiting the Demilitarized Zone and warmed to President Moon. He showed that his attitude can shift when he feels respected or engaged in a dramatic setting. Fifth, Trump is eccentric, but still shrewd. His apparent rudeness is often a simple tactic to bolster his domestic image. His core concern is winning — especially on issues that matter to his base. If South Korea can identify areas of cooperation that align with Trump's domestic political agenda, those can be repackaged as victories for him while also serving Korean interests. One area of interest is shipbuilding. Trump has repeatedly emphasized revitalizing US manufacturing, particularly in industries like naval shipbuilding. South Korea could offer more specific ideas in this field. Moreover, emerging sectors such as artificial intelligence, semiconductors and green technology present opportunities for joint initiatives. The key is to shape these proposals so they appear as Trump's ideas or triumphs. In summary, direct confrontation must be avoided, while strategic praise should be deployed. President Lee must project charisma, not submission. Mutually beneficial programs should be framed as Trump's victories. Expectations for the summit should be lowered. Trump's diplomacy is erratic, but not inscrutable. With careful preparation and psychological foresight, the summit can avoid disaster — and perhaps even yield progress. In this high-stakes encounter, restraint, strategy and narrative control will be more valuable than policy details.
Korea Herald
01-08-2025
- Automotive
- Korea Herald
Hyundai Motor CEO says tariff deal removed uncertainties in US operations
Hyundai Motor Company CEO Jose Munoz said Thursday that the new tariff agreement between South Korea and the United States removes uncertainties, enabling the business to move forward in predictable frameworks. 'This agreement ensures that the partnership (between Korea and the US) will continue flourishing, with predictable frameworks that benefit workers and communities in both nations,' the CEO wrote in a post on LinkedIn. The remark came hours after Korea and the US reached a new trade agreement imposing a 15 percent tariff on Korean vehicle exports to the US, down from the 25 percent tariff that had been in effect since April 3. He said the new tariff arrangement supports Hyundai Motor Group, the automaker's parent company, in its efforts to strengthen ties between Korea's technology base and the US manufacturing network. "The agreement reinforces Hyundai Motor Group's $21 billion US investment strategy and our commitment to creating more than 100,000 direct and indirect American jobs," he said. 'This framework reinforces our localization strategy while maintaining the seamless collaboration between our Korean design, engineering, and manufacturing teams and our American manufacturing operations." Although Hyundai Motor produced over 200,000 vehicles in the US during the first half of 2025, the higher tariff impacted the business significantly, as more than half of its US sales still rely on imports from Korea. According to the company, the 25 percent tariff led to an estimated 828.2 billion won ($591.7 million) in operational losses during the second quarter, contributing to a 15.8 percent on-year decline in operating profit to 3.6 trillion won. In response to the tariff reduction, Hyundai Motor Group also expressed appreciation on Thursday. 'We extend our deepest gratitude to the government departments and the National Assembly for their dedicated efforts in resolving the tariff issues with the US,' the automaker said. However, the agreement also ends the zero-percent tariff Hyundai had enjoyed under the Korea-US Free Trade Agreement prior to April. As a result, the company has lost its edge over Japanese and European automakers, which had faced a 2.5 percent tariff in the US but are now subject to the same 15 percent rate under their own trade deals. Acknowledging this shift, the group stated that its automakers -- Hyundai Motor and Kia -- plan to mitigate the impact of the new tariff regime through comprehensive innovation initiatives.
Korea Herald
31-07-2025
- Automotive
- Korea Herald
Hyundai, Kia lose FTA edge as Korea accepts US tariff hike
Auto giants to boost US production, cut costs, shift supply chain to offset tariff burden The reduction of US tariffs on South Korean automobiles to 15 percent offers only limited relief for Hyundai Motor Group, which faces mounting challenges in the world's second-largest car market. Stripped of its former zero-tariff advantage under the FTA, the automaker is bracing for a tougher fight to maintain its competitive edge. According to Seoul's presidential office, Korea and the US negotiated a 15 percent tariff on Korean-made automobiles on Thursday, lowering the rate from 25 percent. This adjustment addresses item-specific tariffs that were initially imposed to protect strategic US industries alleged to have contributed to trade imbalances. Japan and the EU had previously faced a 2.5 percent tariff on automobile exports to the US before securing their respective 15 percent trade deals. In contrast, South Korean automobiles entered the US tariff-free under the Korea-US Free Trade Agreement. Citing this discrepancy, Seoul had pushed for a lower 12.5 percent tariff rate in the latest negotiations. However, Washington rejected the proposal, saying it faced political pressure to apply a uniform 15 percent tariff across all three regions. 'When Japan first secured the 15 percent rate, it had already faced strong backlash from the United Auto Workers and Detroit's Big Three US automakers (General Motors, Ford and Stellantis),' said Trade Minister Yeo Han-koo during a press briefing earlier in the day. Emphasizing that Korea might have risked any chance of tariff reduction if it had insisted on the 12.5 percent levy, Yeo added, 'From the US perspective, maintaining a minimum 15 percent levy was crucial to protect its auto industry and align with the political climate, regardless of (our) FTA status.' Yeo noted that further tariff reductions are unlikely for the time being, given the need of the US to maintain a balance with other partners like Japan and the EU. He emphasized the government's commitment to capitalizing on every chance to lower tariffs 'even if it's by just 1 percent.' Industry insiders indicate that the 15 percent auto tariff represents an 'unsuccessful bargain' for Korea, as it loses the advantage it had over Japan, the EU and other competitors under the FTA-based zero tariff benefits it previously held. 'While Korea, Japan and the EU are now subject to the same 15 percent auto tariff, Korea must address the additional costs brought on by losing the 2.5 percent tariff advantage it previously held over the other two regions under the FTA,' said Kim Pil-su, an automotive engineering professor at Daelim University. 'Although 15 percent is better than the previous 25 percent, it's not a win for Korea,' Kim added. Kim Tae-hwang, an international trade professor at Myongji University, echoed that view and noted, 'Even if Korea had granted the US full access to its rice and beef markets, Donald Trump wouldn't have allowed a single-digit tariff on Korean automobiles, citing the need for fairness with other car exporters. From the start, it was a losing game for Korea.' According to NH Investment & Securities, under the 15 percent levy, Hyundai's annual tariff burden is projected to be approximately 2.6 trillion-2.7 trillion won ($1.87 billion-$1.94 billion) annually. Samsung Securities estimates Kia's annual tariff impact to be 2.3 trillion won. Hyundai Motor and Kia already experienced the impact of 25 percent US tariffs in the second quarter. Despite a surge in sales revenue, Hyundai and Kia's operating profit declined on-year by 15.8 percent to 3.6 trillion won and 24.1 percent to 2.8 trillion won, respectively. The combined negative effect of tariffs on the two carmakers totaled 1.6 trillion won. Kim, the engineering professor, stated that Hyundai Motor Group's key strategy would involve fast-tracking its production in the US while expanding its presence in other key auto markets such as Europe. On March 24, Hyundai Motor Group Chair Chung Euisun announced a $21 billion investment over four years in the US, focusing on achieving an annual production capacity of 1.2 million vehicles. In its second-quarter earnings conference call, Hyundai Motor said it plans to implement flexible pricing strategies and cost-saving measures and bolster production in the US, including local sourcing of auto parts. Kia vowed to redirect approximately 25,000 vehicles produced at its Georgia plant toward the US market. In response to the finalized tariffs, Hyundai Motor Group stated, 'We extend our deepest gratitude to the government departments and the National Assembly for their dedicated efforts in resolving the tariff issues with the US.' 'Hyundai Motor and Kia plan to pursue diverse strategies to minimize the impact of tariffs while further strengthening their competitiveness through enhanced quality, stronger brand positioning and technological advancements.'
Korea Herald
31-07-2025
- Business
- Korea Herald
Seoul, Washington strike $450b deal to cap US tariffs at 15%
Agreement features $350b investment package, $100b energy imports, most-favored-nation status in key sectors South Korea clinched a last-minute trade deal with the United States on Thursday, capping a looming blanket tariff at 15 percent and averting a steeper 25 percent rate set to take effect Friday. In return, Seoul agreed to a $350 billion investment package aimed at deepening economic ties with Washington. The new 15 percent tariff rate, described as 'reciprocal,' aligns with terms recently accepted by Japan and the European Union. However, it marks a significant departure from the 2012 Korea-US Free Trade Agreement, effectively suspending the near-zero tariffs previously applied to key Korean exports. President Lee Jae Myung hailed the outcome as a 'major breakthrough,' saying it would remove uncertainty for Korean exporters and allow domestic firms to compete on an equal or stronger footing with global peers. 'This agreement aligns America's goal of manufacturing revival with Korea's ambition to expand its industrial competitiveness in the US market,' Lee wrote on Facebook. 'It will further deepen Korea-US industrial cooperation and strengthen our alliance.' Barely weeks into office, Seoul's new government scrambled to craft a concession package, starting at $100 billion and climbing toward Washington's $400 billion demand, as it fought to protect access to the US market that takes in 19 percent of Korea's exports. Of the $350 billion commitment, $150 billion will fund a Korea-led shipbuilding partnership, dubbed 'Make American Shipbuilding Great Again.' Finance Minister Koo Yun-cheol called the initiative 'the single most decisive factor' in securing the deal. 'With Korean shipbuilders recognized for world-class design and construction capabilities, the project is expected to unlock new growth momentum and position Korea as a core partner in reviving US industry,' Koo said. The remaining $200 billion, primarily in equity, loans and credit guarantees, will support industrial collaboration in strategic sectors where Korean firms have a competitive edge, including semiconductors, nuclear power, secondary batteries and biopharmaceuticals. 'To mitigate investment risk, the US government has pledged to take over output from supported projects, which will be screened for commercial viability and sound business rationale,' presidential policy chief Kim Yong-beom told reporters. Seoul also committed to purchasing $100 billion worth of LNG and other US energy products over the next four years. The presidential office emphasized that the final terms were carefully calibrated to Korea's advantage, particularly when compared to Japan's earlier trade deal with the US. Despite similar 2024 trade surpluses, $66 billion for Korea and $68.5 billion for Japan, Korea's total investment commitment came in well below Japan's $550 billion package. 'Excluding the $150 billion shipbuilding fund led by our private sector, Korea's public investment accounts for just 36 percent of Japan's,' Kim said. The deal also grants Korea most-favored-nation status in future US tariff decisions involving key sectors like semiconductors and pharmaceuticals, effectively shielding them from discriminatory hikes. In a win for Korea's agriculture sector, Seoul preserved protections on rice and beef, sensitive areas long targeted by Washington for further market opening. Several critical issues — including burden-sharing for US military presence in Korea, export controls on AI chips, and digital trade rules — were left out of the current deal and are expected to be addressed in future talks, possibly at a bilateral summit. The 50 percent item-specific tariffs on steel, aluminum and copper remain unchanged, as they were not part of the negotiations. A summit between President Lee and US President Donald Trump is being arranged and could take place within the next two weeks, according to presidential aides. The meeting is expected to reaffirm the agreement and lay the groundwork for broader economic cooperation.
Korea Herald
31-07-2025
- Automotive
- Korea Herald
Hyundai, Kia lose FTA edge as Korea accepts US tariff parity
Auto giants to boost US production, cut costs, shift supply chain to offset tariff burden The reduction of US tariffs on South Korean automobiles to 15 percent offers only limited relief for Hyundai Motor Group, which faces mounting challenges in the world's second-largest car market. Stripped of its former zero-tariff advantage under the FTA, the automaker is bracing for a tougher fight to maintain its competitive edge. According to Seoul's presidential office, Korea and the US negotiated a 15 percent tariff on Korean-made automobiles on Thursday, lowering the rate from 25 percent. This adjustment addresses item-specific tariffs that were initially imposed to protect strategic US industries alleged to have contributed to trade imbalances. Japan and the EU had previously faced a 2.5 percent tariff on automobile exports to the US before securing their respective 15 percent trade deals. In contrast, South Korean automobiles entered the US tariff-free under the Korea-US Free Trade Agreement. Citing this discrepancy, Seoul had pushed for a lower 12.5 percent tariff rate in the latest negotiations. However, Washington rejected the proposal, saying it faced political pressure to apply a uniform 15 percent tariff across all three regions. 'When Japan first secured the 15 percent rate, it had already faced strong backlash from the United Auto Workers and Detroit's Big Three US automakers (General Motors, Ford and Stellantis),' said Trade Minister Yeo Han-koo during a press briefing earlier in the day. Emphasizing that Korea might have risked any chance of tariff reduction if it had insisted on the 12.5 percent levy, Yeo added, 'From the US perspective, maintaining a minimum 15 percent levy was crucial to protect its auto industry and align with the political climate, regardless of (our) FTA status.' Yeo noted that further tariff reductions are unlikely for the time being, given the need of the US to maintain a balance with other partners like Japan and the EU. He emphasized the government's commitment to capitalizing on every chance to lower tariffs 'even if it's by just 1 percent.' Industry insiders indicate that the 15 percent auto tariff represents an 'unsuccessful bargain' for Korea, as it loses the advantage it had over Japan, the EU and other competitors under the FTA-based zero tariff benefits it previously held. 'While Korea, Japan and the EU are now subject to the same 15 percent auto tariff, Korea must address the additional costs brought on by losing the 2.5 percent tariff advantage it previously held over the other two regions under the FTA,' said Kim Pil-su, an automotive engineering professor at Daelim University. 'Although 15 percent is better than the previous 25 percent, it's not a win for Korea,' Kim added. Kim Tae-hwang, an international trade professor at Myongji University, echoed that view and noted, 'Even if Korea had granted the US full access to its rice and beef markets, Donald Trump wouldn't have allowed a single-digit tariff on Korean automobiles, citing the need for fairness with other car exporters. From the start, it was a losing game for Korea.' According to NH Investment & Securities, under the 15 percent levy, Hyundai's annual tariff burden is projected to be approximately 2.6 trillion-2.7 trillion won ($1.87 billion-$1.94 billion) annually. Samsung Securities estimates Kia's annual tariff impact to be 2.3 trillion won. Hyundai Motor and Kia already experienced the impact of 25 percent US tariffs in the second quarter. Despite a surge in sales revenue, Hyundai and Kia's operating profit declined on-year by 15.8 percent to 3.6 trillion won and 24.1 percent to 2.8 trillion won, respectively. The combined negative effect of tariffs on the two carmakers totaled 1.6 trillion won. Kim, the engineering professor, stated that Hyundai Motor Group's key strategy would involve fast-tracking its production in the US while expanding its presence in other key auto markets such as Europe. On March 24, Hyundai Motor Group Chair Chung Euisun announced a $21 billion investment over four years in the US, focusing on achieving an annual production capacity of 1.2 million vehicles. In its second-quarter earnings conference call, Hyundai Motor said it plans to implement flexible pricing strategies and cost-saving measures and bolster production in the US, including local sourcing of auto parts. Kia vowed to redirect approximately 25,000 vehicles produced at its Georgia plant toward the US market. In response to the finalized tariffs, Hyundai Motor Group stated, 'We extend our deepest gratitude to the government departments and the National Assembly for their dedicated efforts in resolving the tariff issues with the US.' 'Hyundai Motor and Kia plan to pursue diverse strategies to minimize the impact of tariffs while further strengthening their competitiveness through enhanced quality, stronger brand positioning and technological advancements.'
