South Korea and the US have begun discussions to create a trade package aimed at removing new US tariffs before the temporary suspension on reciprocal tariffs expires in July 2025.

US Treasury Secretary, Scott Bessent, called the meeting “very successful.”

South Korean Finance Minister Choi Sang-mok and Industry Minister Ahn Duk-geun participated in the discussions on tariffs, trade imbalances, and potential cooperation in shipbuilding and energy.

Working-level talks will continue next week to structure future negotiations with a target to finalize the package by July 8, 2025.

The discussions are happening alongside US trade talks with other nations during the IMF and World Bank meetings.

South Korea is facing a 25% reciprocal tariff and is one of the first countries to negotiate with the US, after Japan.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ U.S.-Korea trade negotiations follow established pattern of cyclical revisions

The current trade talks represent the latest episode in a long history of bilateral economic adjustments between the two countries.

The original Korea-U.S. Free Trade Agreement (KORUS) was signed in 2007 with expectations of adding $10-12 billion annually to U.S. GDP and eliminating tariffs on nearly 95% of consumer and industrial products within three years 1.

Despite these projections, the agreement led to unexpected outcomes, with the U.S. trade deficit in goods with South Korea increasing by 75% from $13.2 billion to $23.1 billion between 2012 and 2017 2.

This led to a first renegotiation during Trump’s previous administration, which Ahn confirmed is not being reconsidered in the current talks 3.

The current negotiations’ compressed timeline, targeting a “July package” by July 8, mirrors previous rapid adjustments in this relationship, showing how these allies prioritize finding quick resolutions to trade disputes despite changing economic conditions.

2️⃣ South Korea faces disproportionate automotive industry vulnerability to U.S. tariffs

The automotive sector represents approximately $34.7 billion of South Korea’s $127.8 billion in exports to the United States, making it particularly exposed to the new tariff regime 4.