[Q&A] Yeo Han-koo: "We Avoided the US Storm This Time... We Cannot Be Complacent"

Yeo Han-koo, Trade Minister at the Ministry of Trade, Industry and Energy, commented on the outcome of the recent Korea-US tariff negotiations on July 31, stating, "In a way, we managed to avoid the worst-case scenario with the US," but also cautioned, "We cannot be complacent, as the US tariff policy may change at any time."

On July 31, Yeo Han-koo made these remarks during an online briefing on the 'Results of the Korea-US Tariff Negotiations'.

Hyeon Gu Yeo, Director General for Trade Negotiations, Ministry of Trade, Industry and Energy. (File photo)

Minister Yeo stated, "As a result of these negotiations, Korea will be able to maintain a stable environment for the next three to four years. However, protectionism is on the rise, and there is a high possibility that pressure regarding non-tariff barriers will continue in the future." He added, "We need to proactively improve our systems and fundamentally strengthen the structure and competitiveness of our companies." The following are key questions and answers from the briefing with Minister Yeo.

- What are the main points of the recently concluded Korea-US negotiations?

▲ There are three main points. First, the mutual tariffs, which were scheduled to take effect at 25% on August 1, have been reduced to 15%. Tariffs on automobiles, one of Korea's key export items, will also be reduced to 15%. For semiconductors and pharmaceuticals, which are expected to be subject to future tariffs, Korea will receive most-favored-nation treatment, ensuring conditions no less favorable than those for other countries. Second, to strengthen cooperation in strategic industries such as shipbuilding, the two countries have agreed to establish a $350 billion investment fund for the US market, which will provide support through equity investment, loans, and guarantees. Of this, $150 billion will be allocated to a Korea-US shipbuilding cooperation fund, which will cover the entire US shipbuilding industry ecosystem and invest in specific projects based on the needs of Korean companies. The remaining $200 billion will be used to create funds for strategic sectors such as semiconductors, batteries, bio, pharmaceuticals, and nuclear energy. Finally, Korea has agreed to purchase $100 billion worth of US energy in the future.

- What was agreed upon in the agricultural and livestock sector?

▲ From the beginning of the negotiations, the US side continuously pressured Korea to further open its agricultural and livestock markets. Korea consistently argued and persuaded the US that agricultural and livestock products are politically and industrially sensitive. Korea emphasized that, under the Korea-US Free Trade Agreement (FTA), 99.7% of Korea's market is already open and that US agricultural products are already widely present in Korea. US beef holds the largest market share among imported beef in Korea. Since the launch of the new government, Korea has persistently explained and convinced the US side of the sensitivity of agricultural products. Ultimately, we were able to defend this position. The agreement announced today contains no additional opening of the agricultural market.

- Korea requested a 12.5% tariff on automobiles, but it was set at 15%. What is the background to this decision?

▲ Korea strongly insisted that, under the FTA, the automobile tariff should be set at 12.5%. There were various versions and ideas, including exceptions for certain automobile items, but the final decision was 15%. After Japan secured a 15% tariff on automobiles, strong opposition from US auto unions and the 'Detroit Big Three' made it difficult for the US to offer a lower rate to other countries. After the Japan negotiations concluded, we believed Korea needed to act quickly. We were concerned that, if we delayed, Japan would be the only country to secure the 15% rate, while others might not. The US firmly believed that, regardless of the FTA, automobile tariffs should be at least 15%, and not lower. While 12.5% would have been better for us, we decided not to delay any further.

- Why was steel excluded from the tariff reduction?

▲ US President Donald Trump has a strong stance on steel tariffs. The current 50% tariff on steel has created a difficult situation. During the negotiations, we strongly requested an exemption for Korean steel, but President Trump's position remained firm. As a result, steel was excluded from the negotiations, just as it was in the Japan and European Union (EU) negotiations.

- Who proposed the Korea-US summit first?

▲ President Trump proposed the Korea-US summit first. He even suggested, "How about holding it as early as next week?" indicating his eagerness to meet with the Korean president. In the lead-up to the summit, there will be various discussions through diplomatic and security channels.