South Korea, U.S. to pursue 'July Package' on tariffs, economic cooperation

South Korea and the United States have agreed to move forward with a "July package" that will include adjustments to mutual tariffs, economic security, investment cooperation, exchange rates and other related issues. The target date of July 8, set by both governments, marks the expiration of the 25% tariff imposed by U.S. President Donald Trump on South Korean products. With South Korea’s presidential election scheduled for June 3, the final decision on this package will likely fall to the next president.

Following the conclusion of the “2+2 trade talks” between finance and trade ministers from both countries in Washington, D.C., on April 24, U.S. Treasury Secretary Scott Vance said, “The Korean side has brought the best offer. We can move faster than I initially expected.” In contrast, South Korea’s Deputy Prime Minister and Finance Minister Choi Sang-mok said, “It is significant that we shared the understanding to proceed with calm, orderly negotiations without rushing.”

The difference in negotiation speed between the two countries stems from their contrasting circumstances. The Trump administration wants to resolve negotiations quickly with its ally South Korea in a way that would benefit the U.S. and serve as a “model case.” However, the South Korean government faces political challenges, including the impeachment of its president and an upcoming election. Rushing to finalize an agreement could lead to accusations of making excessive concessions, with significant political repercussions. This is why Choi explained South Korea’s political timeline, trade laws and the need for cooperation with the National Assembly to the U.S. side.

In this context, it has become even more important for South Korea to maintain a measured pace, avoiding getting caught up in the United States’ unilateral approach. The focus should first be on issues with broad domestic consensus, such as shipbuilding cooperation and expanding U.S. liquefied natural gas imports. Negotiations should then focus on securing tariff exemptions or reductions for South Korean products, including automobiles and steel. More sensitive and financially burdensome issues, such as import restrictions on beef and participation in the Alaska LNG project, should be postponed until after the election. Though defense cost-sharing discussions were excluded from this round of talks, the United States could bring them up at any time, so South Korea must be prepared.

However, it is crucial to avoid a passive approach that could result in more aggressive U.S. demands, potentially putting South Korea in a difficult position. South Korea should identify nonnegotiable issues and areas where it may be willing to make compromises for the greater good. After consulting with the business community and political leaders, South Korea should engage in calm negotiations with the United States, ensuring that the baton is smoothly passed to the next government in June. To increase the total national interest, it is a critical moment for wisdom and cooperation that transcends political and governmental boundaries.