President Donald Trump claimed on Tuesday (local time) in his first joint address to Congress during his second term that “South Korea’s average tariff rate is four times higher than that of the United States.” After criticizing China—engaged in a global hegemonic rivalry with the U.S.—for having tariffs “twice” as high, he singled out South Korea with a direct jab, stating its tariffs are “four times” higher.
Under the U.S.-Korea Free Trade Agreement (FTA), 98% of goods are traded virtually tariff-free. Despite this, Trump made it clear that he sees South Korea’s tariff rates as a greater problem than China’s, even though China is considered the most significant security and economic threat. This has raised concerns that the Trump administration may impose heavy tariffs on South Korea, citing non-tariff barriers such as value-added tax and various regulations. The administration has already set a deadline of April 2 to announce possible tariffs on key South Korean exports to the U.S., including automobiles and semiconductors.
Trump also stated, “We provide South Korea with tremendous military and other support, yet this is happening.” By linking U.S. military assistance to tariff issues, he hinted at the possibility of demanding trade concessions in exchange for continued security support, including the stationing of U.S. forces in South Korea.
He further declared, “We must eliminate the CHIPS Act and everything else that remains.” This signals his intention to repeal the law under which the Biden administration provided subsidies to semiconductor companies increasing their investment in the U.S. If the CHIPS Act is dismantled, major South Korean firms such as Samsung Electronics and SK hynix, which have invested heavily in the U.S. to benefit from the law, could face significant financial losses.
Trump also announced his plan to revive the American shipbuilding industry, including the construction of merchant and naval vessels, by establishing a dedicated shipbuilding office within the White House. With the U.S. shipbuilding industry in decline and struggling to meet naval demand, his administration has repeatedly emphasized the importance of South Korean shipbuilders’ technology and capital investments. As a result, experts predict that South Korea may use “shipbuilding cooperation” as a key bargaining chip in future tariff negotiations with the U.S.
Additionally, Trump highlighted a massive natural gas pipeline project in Alaska, one of the largest in the world, stating that South Korea and Japan are investing billions of dollars in it. A South Korean government source noted, “South Korea’s participation in this project could be leveraged in trade negotiations, including potential tariff exemptions.”
Jin-Woo Shin niceshin@donga.com