U.S. President Donald Trump signed a memorandum on Feb. 13, directing his top advisers to come up with new tariff levels that match the tax rates the country’s trading partners charge on American imports, otherwise known as “reciprocal” tariffs. “For purposes of fairness, whatever countries charge the United States of America, we will charge them - No more, no less!” the president wrote on Truth Social.
The New York Times noted that the move toward a reciprocity-based tariff system could “shatter the commitments the United States has made internationally through the World Trade Organization” and “usher in a new era of trade wars.”
Less than a month into his second term, Trump is reshaping the global trade order more forcefully than expected. Since he took office, Trump has slapped tariffs on both allies and adversaries, dismantling the framework of the current multilateral trading system. Simultaneously, he has been upending security alliances by aligning himself closely with Russian President Vladimir Putin in a bid to end the Russia-Ukraine war.
While countries scramble to adjust to this new reality, South Korea, mired in political turmoil following President Yoon Suk-yeol’s martial law incident, is ill-equipped to respond to Trump’s disruptive policies.
The Trump administration announced that it would impose reciprocal tariffs on a “country by country” basis, and the measures could be ready by April 1. U.S. officials said they would retaliate against non-tariff barriers, such as subsidies, value-added taxes, and exchange rate policies. Although South Korea’s Free Trade Agreement (FTA) with the U.S. exempts most American goods from tariffs, Korea still faces the risk of its export subsidies becoming a target for higher duties.
South Korea is tasked with safeguarding exports to the U.S., which account for more than 18% of all exports, amid a leadership vacuum. The government urgently needs to devise strategies to prevent the steel and aluminum tariffs set to take effect on Mar. 12 and plans to counter potential future levies on semiconductors and automobiles. This leaves Korea less than two months to negotiate, all while political uncertainty complicates diplomatic efforts.
Reuters reported on Feb. 13, citing a White House source, that Trump is also considering renegotiating semiconductor subsidies granted to Samsung Electronics and SK Hynix during the Biden administration. If such renegotiations proceed, Korea’s semiconductor industry could suffer significant losses.
