Category: Korea-Business

South Korea was pretty much forced to cut a deal with the Trump administration after the Japanese completed a deal just a week prior. They basically got the same trade deal as the Japanese:

U.S. President Donald Trump said Wednesday that his administration has agreed to lower “reciprocal” tariffs on South Korea to 15 percent from the proposed 25 percent in return for massive investments and market opening, and hold a summit with President Lee Jae Myung at the White House in two weeks.

Trump announced the deal with South Korea in a social media post, shortly after Seoul’s Finance Minister Koo Yun-cheol and other top negotiators met him in an effort to finalize an agreement before Friday, when the steep blanket tariffs are set to take effect unless a deal is reached.

“We have agreed to a Tariff for South Korea of 15%. America will not be charged a Tariff,” he wrote on Truth Social.

Under what he called a “full and complete” trade deal, Trump said South Korea will give the United States US$350 billion for investments “owned and controlled by the United States, and selected by myself.”

He claimed South Korea has agreed that it will be “completely” open to trade with the U.S., and that it will accept American products, including cars, trucks and agricultural goods.

The deal also includes South Korea’s agreement to purchase $100 billion of U.S. liquefied natural gas or other energy products, and invest a large sum of money for Seoul’s investment purposes, Trump said.

“This sum will be announced within the next two weeks when the President of South Korea, Lee Jae Myung, comes to the White House for a Bilateral Meeting,” he said.

Yonhap

You can read more at the link.

Here is what the U.S. Commerce Secretary had to say in regards to South Korea after Japan signed a new trade deal with the U.S.:

U.S. Commerce Secretary Howard Lutnick said Thursday that he could hear “expletives” out of South Korea after Japan reached a trade deal with U.S. President Donald Trump’s administration earlier this week.

Lutnick made the remarks, apparently suggesting that the tariff deal between the United States and Japan might have created a sense of urgency for South Korea, which seeks to reach a deal to avoid or lower the Trump administration’s 25 percent “reciprocal” tariff set to kick in on Aug. 1.

“I could hear the expletives out of Korea when they read the Japanese deal because the Koreans and the Japanese … they stare at each other,” he said in a CNBC interview.

“So you can imagine what they were thinking when they saw that Japan made that deal … They were like, ‘Oh man!,” he added, underscoring that Koreans “very much” want to make a deal.

Yonhap

You can read more at the link.

With the recent trade deal between the U.S. and Japan being agreed upon, this is now putting pressure on the ROK to get their own trade deal done before the August 1st deadline set by the Trump administration:

 South Korea will take into account details of a recent trade deal reached between the United States and Japan in a bid to use it as a possible reference for Seoul’s trade negotiations with Washington, the presidential office said Wednesday.

U.S. President Donald Trump said Tuesday (local time) that Washington had reached an agreement with Japan to cut proposed reciprocal tariffs on Japanese goods from 25 percent to 15 percent, adding the deal also includes Tokyo’s $550 billion investment pledge.

South Korea is also seeking to reduce 25 percent reciprocal U.S. tariffs, as well as sectoral tariffs on autos, steel and aluminum, through a comprehensive trade proposal ahead of the Aug. 1 deadline set by the Trump administration.

Yonhap

You can read more at the link, but it seems like the ROK will likely sign a deal with at least a 15% tariff rate so their imports remain competitive against Japan.

I guess Korean consumers are just not into Canadian coffee:

Canadian coffee brand Tim Hortons, operated in Korea by BKR, closed its Cheongna location in Incheon on Sunday, according to industry sources on Friday.

This marks the first closure of a directly operated store since the brand entered Korea, coming just over a year after the location opened in April 2024.

Industry experts attribute the decision to multiple factors, including declining profitability and the fierce competition within the saturated Korean coffee market.

Korea Herald

You can read more at the link.

I think Philadelphia has such a bad reputation that skilled workers may be hesitant to move there. This means Hanwha may have to offer large pay options to attract additional workers:

Hanwha Ocean’s recent invitation of domestic securities analysts to its Philly Shipyard has sparked both optimism and skepticism over the Korean shipbuilder’s efforts to revive the money-losing facility in Philadelphia.

While analysts anticipate Hanwha will benefit from a surge in orders driven by U.S. President Donald Trump’s push to counter China’s maritime rise by bolstering the American shipbuilding sector, they also questioned whether it will be feasible to secure enough labor in one of the world’s highest-paying countries.

Shinyoung Securities analyst Eom Kyung-ah pointed out that securing the workforce will be key for Hanwha to meet its goal of increasing Philly Shipyard’s revenue to $4 billion by 2035 from $368 million in 2024 by expanding annual capacity to up to 10 vessels from the current 1 to 1.5.

Korea Times

You can read more at the link.

President Trump’s tariffs are definitely contributing to this, but exports across the board are down for South Korea, not just to the U.S.:

South Korea’s exports plunged nearly 24 percent in the first 10 days of May, signaling that the US Trump administration’s tariffs are beginning to take a toll on the trade-dependent economy.

Outbound shipments totaled $12.8 billion during the May 1-10 period, down 23.8 percent from a year earlier, according to preliminary data from the Korea Customs Service released Monday.

Factoring in fewer workdays — five days during the period this year compared to 6.5 days in 2024 — average daily exports fell by just 1 percent, the agency added.

Shipments to China and the US — Korea’s two largest export markets — fell 20.1 percent and 30.4 percent, respectively. Exports to Vietnam declined 14.5 percent, while those to the European Union plunged 38.1 percent. Among the top five destinations, only Taiwan posted growth, with its shipments jumping 14.2 percent.

Korea Herald

You can read more at the link.

I guess we will see if this trip to Korea by Trump Jr. will lead to any breakthroughs in trade negotiations with the U.S.:

Donald Trump Jr., the eldest son of US President Donald Trump, arrived in Seoul on Tuesday for a meeting with around 20 business leaders from South Korean conglomerates, industry sources said.

The two-day trip by Trump Jr., his first to South Korea since his father’s inauguration in January, comes at the invitation of Shinsegae Group Chairman Chung Yong-jin.

Per sources, Trump Jr. arrived at Gimpo International Airport, western Seoul, in his private jet at around 6:25 p.m. Tuesday. It had been scheduled to touch down at 4:45 p.m. but there had been a slight delay before the departure.

Wearing a black cap and a long-sleeve shirt, Trump Jr. left the airport without speaking to the dozens of waiting South Korean reporters.

South Korean business circles asked Chung to facilitate Trump Jr.’s visit as a way to establish contact with the Trump administration, according to the sources.

Korea Herald

You can read more at the link.

I guess we will see next week if the ROK can strike a deal or not with the Trump administration. What will be interesting is if a deal is struck will the likely Lee Jae-myung administration in two months stick to it?:

The United States will engage in trade negotiations with South Korea next week, Treasury Secretary Scott Bessent said Monday, stressing the “first mover advantage,” as countries are striving to strike deals with the U.S. to minimize the impact of President Donald Trump’s tariff policy on their economies.

In a Bloomberg interview, Bessent touched on plans for upcoming negotiations with South Korea and Japan. Earlier this month, Trump imposed steep “reciprocal” tariffs on the two allies and dozens of other countries but later placed a 90-day pause on the new tariffs.

“We had Vietnam in last week. We (have) Japanese in on Wednesday. … South Korea next week,” he said. “So it’s going to move fast.”

The secretary underscored there will be a “first mover” advantage as Japanese Prime Minister Shigeru Ishiba told parliament Monday (Tokyo time) that Japan will not make compromises for the sake of quickly wrapping up tariff talks with the U.S.

“I think there will be advantage to our allies, especially a first mover advantage,” he said. “Usually, the first person who makes a deal gets the best deal.”

Yonhap

You can read more at the link.

Since Samsung has so much production in Vietnam compared to Apple’s heavy reliance on China, they probably are in better position to navigate the growing trade war between the U.S. and China:

Samsung Electronics remains on alert amid the Donald Trump administration’s unpredictable trade policies, despite the United States granting tariff exemptions for smartphones, laptops, personal computers and semiconductor equipment.

The U.S. Customs and Border Protection said Saturday (local time) that those devices will be excluded from the sweeping 10 percent baseline tariff on nearly all countries, as well as the retaliatory 125 percent duty on China.

Following the updated guidance, Samsung has been considered one of the beneficiaries along with Apple and TSMC. Bloomberg described the measure as a “big win” for major tech firms.

The optimistic outlook stems from Samsung’s heavy reliance on production in Vietnam, which is on the verge of facing a 46 percent “reciprocal tariff” from the U.S. if trade talks between Hanoi and Washington fail following the current 90-day pause. The Korean company produces nearly 50 percent of all Galaxy smartphones sold globally at its Vietnamese facilities.

Korea Times

You can read more at the link.

I think this is where the political crisis has really impacted South Korea, which is the inability to effectively negotiate tariffs with the Trump administration because you don’t know who will be President week-to-week:

Industry Minister Ahn Duk-geun, right, speaks at the Korea Chamber of Commerce and Industry in Seoul, Thursday, during a meeting with businesspeople to discuss countermeasures against U.S. reciprocal tariffs. In the middle is Trade Minister Cheong In-kyo.

Korea has been hit with the highest reciprocal tariff rate among the 20 countries that have free trade agreements (FTAs) with the United States.

With it clear that Seoul had failed to persuade Washington to impose lower tariffs on Korean products compared to those from major exporters like Japan and the European Union, concerns are growing over Korea’s diplomatic approach and future trade negotiations with the U.S.

The White House announced on Wednesday (local time) that the U.S. will impose a 26 percent reciprocal tariff on Korea, while charging 24 percent on Japan and 20 percent on EU member states.

Korea Times

You can read more at the link.