[Insight & Opinion] Korea-U.S. Tariff Negotiations: We Must Not Get Swept Up in America's Rush

President Trump recently hinted at renegotiating defense cost-sharing, pushing for a "one-stop shopping" negotiation that bundles trade and security into a single package. In fact, Nobel laureate in economics Thomas Schelling once proposed a bundling strategy, suggesting that presenting mutually beneficial deals together can lead to more favorable negotiation outcomes. Presenting multiple proposals at once to create a situation where the other party finds it difficult to refuse is also a negotiation tactic. From this perspective, we need to closely examine whether the bundling strategy presented by the United States is appropriate.

Some argue that such hurried negotiations by the United States could send the wrong signal to its allies. How can trade be a zero-sum game? Is it justifiable for the United States to hold its allies hostage with political issues unrelated to economic decisions? Traditionally, U.S. economic policy has been based on cooperation, multilateralism, and international norms, aiming to correct unfair trade practices or attract strategic industries to its own soil. The Trump administration's unprecedented tariff negotiations with allies carry the risk of undermining the economic ecosystem that has supported U.S. competitiveness. Within the United States, there is growing discontent with tariff policies, leading to declining presidential approval ratings and ongoing protests.

The United States, feeling pressed for time, has reached out to us and other allies to conclude negotiations quickly. On April 24 (local time), a "2+2 Trade Consultation" was held at the White House, attended by the finance and trade chiefs of both South Korea and the United States. U.S. Treasury Secretary Scott Besent declared, "It appears we can reach a memorandum of understanding next week." The Korean government maintains that defense cost-sharing is a separate track, and unlike negotiations with Japan, President Trump excluded military issues (U.S. troop cost-sharing) from the agenda. From a negotiation strategy perspective, we must keep several points in mind and not get swept up in America's rush.

First, contrary to the U.S. claims, we should pay attention to cases where the counterpart was left disappointed with unsatisfactory outcomes. Hyundai Motor, Taiwan's TSMC, and U.S.-based Nvidia all made bold investments but could not avoid unexpected attacks from the Trump administration. Despite offering "big deals for Trump," these companies did not receive credible assurances. And it is not just corporations. After the first tariff negotiation with Japan, President Trump declared "significant progress." In response, Shigeru Ishiba, a Japanese politician, made it clear that "Japan will not rush into negotiations and has no plans to make major concessions." This indicates dissatisfaction with the negotiations with the United States.

Second, considering the 90-day mutual tariff suspension, it is preferable for the new government, which will be inaugurated on June 3, to conclude the negotiations. In this round of talks, we should negotiate smoothly with due courtesy, keeping national interests in mind, and leave the resolution of critical issues to the new administration.

Third, we must observe how the tariff negotiations between the United States and China progress. The United States wants to establish model cases with five countries?South Korea, Japan, Australia, the United Kingdom, and India?but there is no reason for us to go first. A prudent strategy is to observe how other countries proceed and make decisions accordingly. It would be unwise to take the first blow and not receive proper compensation. Let us not get caught up in President Trump's unilateral top-down approach.

We must emphasize that, as a Korea-U.S. Free Trade Agreement (FTA) country, tariff rates for concession items should be zero. We should use cooperation in shipbuilding or purchases of liquefied natural gas (LNG) as leverage to minimize mutual tariffs. Currency negotiations have suddenly become part of the agenda. Given the excessive depreciation of the won, we must clearly explain that decisions are being made transparently to avoid misunderstandings. With our economy experiencing negative growth in the first quarter, dark clouds are gathering. At times like this, we must be even more prudent in negotiations.

Cho Wonkyung, Professor at UNIST and Director of the Global Industry-Academia Cooperation Center