South Korea’s central bank governor said on April 25 (local time) that global finance chiefs were urging the United States and China to quickly reach a deal to ease trade tensions, warning that prolonged tariffs would carry heavy economic costs.
Speaking to South Korean correspondents in Washington, Bank of Korea Governor Rhee Chang-yong said there was widespread concern at the Group of 20 (G20) finance ministers and central bank governors meeting and at the International Monetary Fund (IMF) and World Bank spring meetings over President Donald Trump’s escalating tariff measures.
“There were many voices calling for the U.S. and China to reach a swift agreement through negotiations,” Rhee said. “If negotiations fail, even if mutual tariff exemptions for other countries are extended, the economic costs will be significant.”
Rhee noted the deep integration of China in global supply chains, making it difficult for countries to bypass China in trade. “The world is so heavily intertwined with China that it’s not realistic to discuss trade without involving China,” he said.
He added that growth projections showed little difference between scenarios where tariffs on countries other than China were lifted after 90 days and where they were not. “The effect of exemptions is offset because tariffs on China have increased significantly and Beijing has responded with retaliatory measures,” he said.
Rhee emphasized that while a concrete outlook for U.S.-China talks remains unclear, “an agreement of some kind is needed for global markets to feel at ease.”
The key theme of the meetings, Rhee said, was “uncertainty,” citing concerns about the direction of U.S. tariff policies, recent volatility in financial markets – especially in U.S. Treasury yields – and fluctuations in the dollar.
“Participants questioned whether U.S. financial markets would stabilize if bilateral negotiations go well, and whether the current situation is temporary or long-term,” he said. “Uncertainty was the dominant word throughout the week.”
Despite sharp market movements, including in U.S. Treasuries and currencies, Rhee said many officials expressed relief that market mechanisms continued to function properly.
On how Korea is viewed externally, Rhee said while there was concern that South Korea would be hit hard by the trade war, there was also recognition that Korean firms were adapting more nimbly compared with other export-dependent Asian economies.
“The situation is tough, but the overall view is not entirely negative,” he said.
Rhee praised the European Union’s response to the trade tensions as “impressive,” noting that the crisis had fostered consensus to advance long-delayed structural reforms.
“As anti-American sentiment rises, there is growing support in Europe to accelerate banking and capital market integration and to strengthen the euro as a safe-haven currency,” he said.
Separately, Rhee addressed discussions from the “Korea-U.S. 2+2 Economic Dialogue” held on April 24, where U.S. Treasury Secretary Scott Bessent suggested that Seoul and Washington handle currency policy through direct talks between finance ministries.
Rhee said that move was “positive,” explaining it would help avoid misunderstandings about the Korean won’s depreciation by focusing on economic fundamentals rather than purely political or trade perspectives.
Regarding political risks in South Korea following the Dec. 3 martial law declaration and the impeachment of the president, Rhee said conditions had “improved significantly” but had not yet fully returned to pre-crisis levels.
“We hope for complete stabilization after the presidential election on June 3,” he said.
