Trump moves to raise tariffs on Korea despite government's efforts in Washington

The Korean government's all-out effort in Washington last week to counter U.S. President Donald Trump's warning of higher tariffs ended without producing tangible results. Though Seoul says that “unnecessary misunderstandings” have been cleared up, observers warn that the two countries' discussions on tariffs — which narrowly concluded last October — once again enter a period of uncertainty as Washington moves to execute Trump's threat.“Our mutual understanding has deepened significantly,” said Minister of Trade, Industry and Resources Kim Jung-kwan, who returned to Korea on Saturday after meeting twice with U.S. Secretary of Commerce Howard Lutnick in Washington on Thursday and Friday.“I believe unnecessary misunderstandings have been resolved,” he told reporters upon his arrival at Incheon International Airport on Saturday.However, Kim conceded that U.S. “measures to raise tariffs [on Korea] have already begun.”“They are preparing for publication in the Federal Register and for sanctions,” he said.The Korean government is seeking countermeasures. Minister Kim also plans to continue consultations through video conferences with Lutnick and other U.S. officials, and Trade Minister Yeo Han-koo is staying in the United States until early this week to meet with U.S. Trade Representative Jamieson Greer and discuss trade issues.“The Korean government will actively demonstrate its willingness to implement the Korea-U.S. tariff agreement,” a senior official at the presidential office said in a phone call Sunday.The first key issue in tariff discussions involves when the National Assembly will pass the special law on investing in the United States. The ruling Democratic Party’s chief policymaker Han Jeoung-ae pointed to late February to early March as the possible deadline.“We will try to keep to this schedule,” said Han. “If the National Assembly follows the set timetable for the bill, I think negotiations between Korea and the United States will progress.”Though the government may consider other measures to show the United States that Korea is committed to keeping its side of the agreement, its hands may be tied due to a lack of legal basis.“Official procedures can continue only after the special act is passed,” Minister Kim said. “This limitation is what the United States has expressed regret over.”Another concern is President Trump's frequent policy reversals. He recently floated imposing 10 percent tariffs on eight European countries in connection with a Greenland dispute before withdrawing the threat and has threatened Canada with tariffs of 100 percent over issues including Canada’s improving ties with China.Korea also faces specific dangers when it comes to investing in the United States. Korea wants to adjust the pace of investment, citing factors such as a weak won, while the Trump administration, facing midterm elections in November, wants to produce visible results as early as possible.The two sides agreed to select investment destinations that are “commercially rational,” but this remains a matter of consultation rather than a binding agreement, meaning that Korea’s intentions may not be fully reflected in the selection process. For instance, Trump has repeatedly said Korea would participate in an Alaska liquefied natural gas development project, but Korea has drawn a line, citing commercial viability.“Japan is in a somewhat different situation from Korea because it has greater investment capacity, and its government is actively pursuing investment in the United States,” Chang Sang-sik, the head of international trade research at the Korea International Trade Association, said. “There is a high possibility that similar pressure from the United States will be repeated in the future over the selection of investment sectors or the pace of investment execution.”Managing unexpected friction between Korea and the United States is another challenge. During past tariff negotiations, the Korean presidential office stressed integrated management of security and tariff issues. This means that conflicts that erupt in the tariff sphere could affect diplomacy and security.“Among the various countries that have reached tariff agreements with the United States, the fact that tariff hike pressure has been particularly directed at Korea is by no means a positive signal,” a senior government official said.BY AHN HYO-SEONG [ [email protected]