Korea Has Three Weeks to Resolve U.S. Auto and Steel Tariff Disputes

U.S. President Donald Trump issued an executive order on Monday that postponed the mutual tariff deadline until August 1, giving nations more time to continue discussions for another three weeks. South Korea seems to have avoided the most severe consequences; despite the 25% tax rate initially announced in April remaining the same, other countries like Japan face significantly higher tariffs.

The repeated emphasis by Trump that tariffs on key sectors affecting South Korea are not open to discussion suggests that Seoul may face tough bargaining sessions.

Even though he repeatedly stated he wouldn't postpone the implementation of mutual tariffs, Trump provided a small break for 14 nations, such as South Korea, by announcing that the updated tariff levels would not come into force until August 1. This decision was formalized via an executive order issued by Trump.

South Korean National Security Advisor Wi Sung-lac held talks with U.S. Secretary of State Marco Rubio on the same day. Following their discussion, South Korea's presidential office cited Rubio stating he hopes the U.S. will collaborate closely with major allies to achieve an agreement before the August 1 extension date, despite the fact that letters outlining new tax rates have already been distributed.

The United States has clearly indicated that the additional time aims to motivate partners to increase their commitments during discussions. South Korea's Ministry of Trade, Industry and Energy also highlighted the break, noting it would "encourage moves toward reaching an agreement."

However, South Korea has few reasons to celebrate the prolonged negotiation timeline. Trump posted 14 letters on Truth Social, revealing that Japan and South Korea were the initial recipients. It appears Trump is intent on setting an example for these two nations, which are key U.S. allies holding significant trade surpluses against America. Now, the South Korean administration needs to determine whether to maintain its original strategy of observing outcomes from other countries' talks before taking action.

The U.S. appeared reluctant to make compromises on matters important to South Korea, like reducing taxes on cars and steel. In formal messages addressed to global leaders, Trump stated that the mutual tariffs were "distinct from all sector-specific duties." He further mentioned that these tariffs could be modified provided that trade obstacles are reduced.

Deputy Director of the Asia Society Policy Institute (ASPI) and ex-U.S. Assistant Trade Representative Wendy Cutler stated in a press release that "the U.S. won't consider relief from Section 232 industry-specific tariffs, such as those affecting automobiles, which are crucial for both Korea and Japan."

The South Korean administration aims to reduce the mutual tariff to as low as 10%, while waiving taxes on vehicles (25%), steel, and aluminum (each at 50%), or at the very least cutting duties in these areas so they do not put Korean products at a disadvantage compared to others.

On the flip side, Tom Ramage, an analyst with the Korea Economic Institute of America, stated during a telephone conversation that the potential modifications referenced at the conclusion of Trump's letter might imply targeted import duties. Implementing such specific tariffs could potentially go against the advantages for American businesses relying on South Korean steel and automotive components, according to Ramage, who pointed out the chance that these taxes are intended as leverage to gain benefits from Korea.

Ramage noted that although mutual tariffs, due to their subjective character, are straightforward to establish, industry-specific tariffs are more complex and entail intricate discussions that might necessitate an additional time extension.

With Trump's negotiation deadline set for August 1st, the schedule for a North Korea-U.S. meeting is now drawing significant attention.

As Trump tends to negotiate agreements through private discussions with world leaders, he might meet with South Korean President Lee Jae-myung to finalize an accord prior to the deadline, based on how the talks advance.

Written by Kim Won-chul, Washington bureau chief, and Shin Hyeong-cheol, staff writer

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