The impact of Trump’s policies on South Korea
Tariffs rise, tensions follow
In November 2024, Donald Trump made history by becoming the second president in United States history to serve non-consecutive terms, having succeeded in his term in 2017 and 2025. Since his inauguration in January, he has continued that history-making pattern with his unprecedented “America First” foreign policy related to reducing unnecessary government spending, renegotiating existing trade deals and strengthening military power and influence. As one of America’s most important allies in Asia, South Korea is positioned directly in the crosshair of Trump’s foreign policy. South Korea and the United States have a long-standing alliance, established back in 1954 with the U.S.-ROK Mutual Defense Treaty after the Korean War. While the U.S.-ROK alliance was smooth sailing in terms of economy and security during Trump’s first term, his policies seem likely to have an impact on the U.S.-ROK alliance after his second term. In particular, it is necessary to examine how the diplomatic environment in the U.S. and South Korea has changed compared to his first term in 2017.
Since its establishment in 1954, the U.S.-ROK alliance has strengthened the relationship between South Korea and the United States through political, military and economic cooperation.
Under Trump’s first term in 2017, the US and South Korea reached a duty-free measure for Korean steel products in compliance with the U.S.-ROK FTA regulations through mutual consultation. As a result, trade between the two countries increased by 15%, and there were mutually beneficial results. In addition, economic cooperation was achieved through the agreement to hold the U.S.-ROK Energy Industry Dialogue.
The two countries also agreed on the number of U.S. troops stationed in South Korea and the defense cost-sharing through consultation, and maintained sanctions against North Korea to deter North Korea’s nuclear program even during the U.S.-North Korea summit.
The U.S. currently finds itself in a volatile international economic and security environment. As China’s technologies continue to develop, U.S.-China competition is intensifying, and the U.S.A is deeply involved in global wars, such as those in Ukraine and the Middle East. In addition, the possibility of more security crises, such as those in China and Taiwan, cannot be ruled out. In this environment, the Trump administration is putting forward the slogan of “America First,” which embraces unilateralism and puts the interests of the United States as the top priority in foreign diplomacy. Regarding South Korea, the two policies that will have the greatest impact are tariffs and the issue of defense costs for stationing U.S. troops in Korea.
Tariff is an important system that can protect a country’s economy and security. For this reason, section 232 of the U.S. Trade Act grants the president the authority to apply import restrictions on certain products for national security reasons. Based on this provision, President Trump announced on Feb.10 that a 25% tariff would be imposed on all steel and aluminum imports. He also nullified all existing exemption agreements and emphasized that no country would be exempt or exempted.
During Trump’s first term in 2018, a 25% tariff was imposed on imported steel for national security reasons. But unlike the latest tariff, major steel exporting countries, including Korea, were exempted from steel tariffs. As a result, Korea was able to export up to 2.63 million tons of steel duty-free, and Korea currently is the fourth largest exporter of both aluminum and steel to the United States, according to the International Trade Administration.
However, due to the imposition of a 25% steel tariff, Korea will suffer a huge blow not only in the automobile industry but also in home appliance industries such as Samsung Electronics and LG Electronics; steel accounts for a large portion of the production of refrigerators and washing machines. In addition, the steel tariff is also expected to affect the lives of American citizens, as they will likely increase the prices of foreign products used by American citizens.
The new tariffs on steel aluminum may not even be the end. In particular, Trump may place tariffs on automobile imports, Korea’s top export item to the United States, will greatly damage Korea’s export economy. “If the U.S. market closes the domestic steel industry will face problems of oversupply and weakened price competitiveness.” Professor Emeritus Dong-jun Min, of Yonsei University’s Department of Materials Science and Engineering emphasized the damage that Korea would suffer. Furthermore, with the auto industry using parts produced in various countries around the world, Peter Nagle, an automotive economist at S&P Global Mobility, told CNN, “There is probably not a vehicle on the market today that wouldn’t be affected in some form or fashion by tariffs. I would think prices would start to change in the one-to-two weeks after the tariffs go into effect.”
Korea should likely renegotiate the tariffs with the United States. When Trump announced that he would discuss tariff exemptions for Australia on Feb. 10, major exporting countries immediately entered into negotiations with the United States. Korea announced on Feb. 28 that it had met with Commerce Secretary Howard Rutnick the day before and requested an exemption from the tariff measures from the United States. In addition to Korea, Japan also asked Washington to exclude its products from the steel and aluminum tariffs. The E.U. and the U.K. said they were ready to discuss trade agreements and tariff reductions.
In this regard, South Korea’s security situation is closely linked to the presence of U.S. forces in South Korea. Currently, about 28,500 US troops are stationed in Korea to respond to military threats from North Korea and strengthen the U.S.-ROK alliance. According to the agreement signed under the Biden administration, Korea is paying about $1.13 billion in defense costs for the stationing of U.S. troops in Korea. This is an 8.3% increase from the 2024 cost, according to the Seoul Foreign Ministry. The agreement is scheduled to last until 2030. However, Trump has a slightly different view regarding the issue of cost payments.
“If I were there now, they’d be paying us $10 billion a year. And you know what? They’d be happy to do it,” Trump said in an interview with the Economic Club of Chicago on Oct. 15, prior to his inauguration. According to Vice President JD Vance during the inauguration of Secretary of Defense Pete Hegseth at the White House on Jan. 25., this is because Trump has a more “sparing” view, compared to his predecessors, on “how to deploy our most valuable resources.” The director of the Korea Strategy Center at the Sejong Institute predicted that “President Trump has been complaining that too much money is being spent on maintaining U.S. troops stationed on the Korean Peninsula and on joint U.S.-ROK military exercises, so it is highly likely that he will try to reduce the size of U.S. troops stationed in Korea and scale back joint military exercises after taking office.” In fact, in an interview with Time, Trump demanded that Korea pay up to 400% more, saying, “Why should we defend some country? And we are talking about very wealthy countries. And they are very wealthy, so why wouldn’t they want to pay (defense costs)?”
Strengthening economic and security cooperation in the U.S.-ROK alliance is desirable for both the U.S. and Korea, so it is important to negotiate a win-win situation for both sides. In a report titled “Characteristics of Security Pledges of 2024 US Presidential Candidates” published on Oct.14, Asian Institute for Policy Studies professor Wan-gyu Choi of the Korea Military Academy explained the characteristics under the Trump administration and analyzed whether Trump’s policies could weaken the U.S.-ROK alliance in the long term. He said although there may be risks such as renegotiation of the defense cost sharing, if the two countries can find areas mutually beneficial for both, they can achieve unprecedented results through flexible and forward-looking negotiations.
But it remains to be seen whether the U.S.-ROK alliance can achieve such new developments , because Trump’s second term will inevitably bring new challenges to the U.S.-ROK relations. South Korea should closely analyze the impact of the Trump administration’s trade and foreign policy on South Korea in the future and establish a proactive foreign strategy to cooperate with the U.S. and create better economic and diplomatic relations for both.