South Korea and the United States began a new round of trade discussions in Washington on May 20, 2025.

Led by Chang Sung-gil, director-general for trade policy at South Korea’s industry ministry, the talks will address tariff and trade-related issues and are set to conclude on May 22, 2025.

The discussions will focus on six areas: balanced trade, non-tariff measures, economic security, digital trade, country of origin rules, and commercial considerations.

South Korea seeks to reduce the impact of tariffs imposed by the US, including a 25% duty on automobiles, steel, and aluminum.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ Trade deficit history drives tariff decisions despite KORUS gains

The history of US-Korea trade imbalances provides crucial context for today’s negotiations, with persistent deficits driving US policy despite some KORUS success.

The US trade deficit with South Korea grew significantly from $13.2 billion in 2012 (when KORUS was implemented) to $23.1 billion by 2017, a 75% increase that became a focal point in previous trade discussions 1.

Despite this headline figure, economic analysis shows the bilateral trade balance actually improved for many goods categories between 2011-2016, with US exports to South Korea growing for over 40% of goods already exported 2.

This contradictory picture explains why successive administrations have targeted South Korea repeatedly. The Trump administration renegotiated KORUS in 2018, focusing on automotive exports, yet deficit concerns persist in 2025 3.

The current negotiations reflect a continued pattern where overall trade deficit numbers drive US policy more than sectoral successes, creating cycles of trade tension despite the comprehensive free trade agreement.

2️⃣ Non-tariff barriers emerge as central trade negotiation focus

The prominence of non-tariff barriers in these talks highlights how modern trade disputes have evolved beyond simple tariff negotiations to more complex regulatory issues.

The USTR’s recent National Trade Estimate Report specifically identified 21 non-tariff barriers in South Korea, including restrictions on agricultural products like the ban on American beef from cattle over 30 months old and various digital trade barriers 4.

South Korea’s automotive market structure is particularly contentious, with domestic producers accounting for 81% of cars sold there—a fact the US cites as evidence of protectionist policies despite tariff eliminations under KORUS 5.