Seoul, recalling the unpredictability of Trump’s first term, viewed his potential return to the White House with caution rather than despair. Trump has repeatedly described South Korea as a “rich” country or a “money machine,” complaining that while the U.S. is responsible for its defence, South Korea has been free-riding and not contributing its fair share. He even went so far as to claim that, despite being an American ally, Seoul has been exploiting Washington—benefiting from large trade surpluses by engaging in unfair trade practices and imposing tariffs four times higher than those of the U.S.
Unfortunately, when the second Trump administration was inaugurated in January, Seoul was in a difficult situation and rather ill-prepared due to unprecedented political turmoil. President Yoon Suk Yeol, now ousted from office, abruptly declared martial law in early December 2024, claiming that extraordinary measures were inevitable in response to what he saw as widespread legislative ‘abuse of power’ by the dominant opposition party, which held nearly two-thirds of the seats in the Korean National Assembly. Yoon’s martial law was short-lived and overturned within hours; he was immediately impeached, which ultimately led to his removal from office by the Constitutional Court in early April. In the months following the impeachment, however, the country descended into extreme political chaos, with the position of acting president changing hands three times. A presidential by-election has finally been called and the nationwide referendum took place on June 3. Lee Jae-myung, leader of the left-leaning opposition party, emerged as the country’s new president and immediately took office on June 4.
With a trade surplus of $66 billion with the U.S. in 2024 alone, South Korea was singled out by Washington as one of the “Dirty Fifteen,” the fifteen countries with the largest trade surpluses with the U.S. As a result, Seoul was poised to face intense pressure from the Trump administration, which appears determined to rebalance trade relations with one of its closest allies in Asia.
The 25% reciprocal tariffs have been temporarily suspended for 90 days. During ministerial consultations with Washington last April, Seoul agreed to conclude tariff negotiations by July 8, when the temporary suspension expires. However, with the incoming president set to take office in less than a month, the current ‘caretaker’ government under the acting president lacked the authority to negotiate any definite deal with Washington.
Consequently, although working-level bilateral trade talks were underway, a full-fledged trade deal has effectively been put on hold until a new president takes office. As a result, significant uncertainty looms over the future of Seoul’s trade relations with Washington until the newly inaugurated Lee government settles in and eventually finds ways to strike a deal with the U.S.
