South Korea, Japan, and the EU Accept Tariff Demands... "High Tariffs Difficult for Mexico and Canada" [Deglobalization? New Order!] ⑤

How Will Trump-Style Tariffs Unfold?
Similar Proposals for Allies, but Key Differences in Details
Stronger Investment Commitments Demanded from South Korea and Japan than the EU
Future Responses of Closely Linked Mexico and Canada Draw Attention

As the Donald Trump administration in the United States presents tariff bills to various countries, different approaches are emerging depending on the nation. South Korea, Japan, and the European Union (EU) have accepted similar demands, but each continues to grapple with the United States over the details of implementation. There are expectations that, given the close economic ties, it will be difficult for the United States to impose high tariffs on Canada and Mexico. Experts also predict that in the case of China, rather than a direct confrontation through high tariffs, the outcome will likely be a political declaration in which both sides claim "victory" despite little substantive progress in negotiations.

Similar Negotiation Proposals, but Different Approaches for the EU, Japan, and South Korea

The United States recently completed initial tariff negotiations with the EU and Japan, followed by additional detailed agreements. However, South Korea is facing difficulties in these additional negotiations. After securing a 15% tariff agreement with major allies, the United States is now working to formalize specific implementation plans in writing, in addition to various investment pledges and the easing of non-tariff barriers.

However, each country has its own approach in the detailed negotiations. While the negotiation methods appear similar, the concessions and gains differ based on national circumstances. The EU, which had non-tariff barriers as well as tariffs in place against the United States, faces relatively fewer additional demands as it lowers these barriers. In contrast, following Japan, South Korea is under pressure not only to accept tariffs but also to fulfill excessive investment commitments in the United States.

For the EU, the $600 billion investment is designated as coming from "European companies" rather than the EU or its member state governments. In contrast, for Japan, the $550 billion investment is to be sourced by "Japan." While the United States will have authority over the management of investment funds and the selection of investment projects in Japan, the EU agreement merely states that "European companies are expected to invest $600 billion in strategic industries by 2028," meaning the EU is not held responsible if the investment does not materialize. Additionally, in Japan's case, profits are split 50-50 until the principal is recovered, after which 90% of profits go to the United States. It is reported that the United States is demanding that South Korea adopt the same approach as Japan for its pledged $350 billion investment.

Heo Yoon, a professor at Sogang University’s Graduate School of International Studies, explained, "Since we have a Free Trade Agreement (FTA) with the United States, there are no tariffs, so there is nothing to negotiate on that front. On the non-tariff side, further opening of agricultural and livestock products such as rice and beef, as well as fruit imports like apples, is difficult due to political issues. That is why Howard Lutnick, the U.S. Secretary of Commerce, has rapidly shifted his demands toward investments."

Heo Jeong, President of the Korean Association of International Trade and Professor of Economics at Sogang University, said, "Although the negotiation proposals appear similar, there is a clear difference when comparing the economic status of South Korea to that of Japan and the EU. In this respect, the current negotiations put South Korea at a disadvantage." He added, "In the future, the United States may also present us with proposals based on what was agreed with Japan."

Experts predict that in the ongoing tariff negotiations with the United States, it will be difficult for the EU, Japan, and South Korea to mount a full-scale confrontation or firmly reject the proposals. Instead, they are likely to continue multilateral cooperation discussions at the negotiating table.

High Tariffs Difficult for Mexico and Canada... The Same Applies to China

In the case of Mexico and Canada, the existence of the United States-Mexico-Canada Agreement (USMCA) and the large number of American companies operating locally make it unlikely that the United States will easily conclude tariff negotiations as it has with other countries. Ji Mansoo, Senior Research Fellow at the Korea Institute of Finance, stated, "Mexico and Canada are the United States' first- and second-largest trading partners. They are wavering between resisting and adapting to U.S. tariff demands."

He continued, "While the United States could push aside the Korea-U.S. FTA, it cannot do the same with the USMCA, and handling it is much more complicated. If the United States targets Canada and Mexico, American companies operating there will suffer." He added, "Going forward, monitoring not only the EU but also the responses of Canada and Mexico will be important for gauging the spread of Trumpism worldwide."

Similarly, experts predict that in the case of China, a full-scale tariff war would be damaging to both the United States and China. Therefore, rather than imposing high tariffs, the United States is likely to continue making political declarations, as it is doing now. Ji noted, "The fundamental issue is whether the two countries can truly confront each other head-on and resolve these issues. So far, there have been three rounds of negotiations, but despite the lack of tangible results, both sides have concluded that 'the negotiations went well.'"