South Korea weighs painful concessions to avert Trump's looming tariffs
US President Donald Trump's across-the-board 25 per cent tariff is set to take effect on Aug 1.
South Korea will hold high-level trade talks with the US on July 25, accelerating efforts to head off sweeping tariffs by weighing politically sensitive concessions that could reshape ties between the two allies.
Finance Minister Koo Yoon-cheol and Trade Minister Yeo Han-koo will meet their US counterparts, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, in a so-called '2+2' format in Washington, Mr Koo told reporters on July 22.
Seoul is preparing for a diplomatic push in the final days before the
Aug 1 deadline when President Donald Trump's across-the-board 25 per cent tariff is set to take effect.
South Korea's foreign and industry ministers are also expected to travel to the US separately as early as this week, while National Security Adviser Wi Sung-lac recently departed for the US on his second trip in under two weeks.
Trade Minister Yeo has previously addressed the difficult trade-offs required to protect South Korea's broader strategic and economic interests.
While no formal offer has been extended, agricultural concessions have emerged as one of the few options under consideration. Past efforts to open the beef market sparked nationwide protests, and any shift on rice could face even stiffer resistance.
'We must make strategic judgements – protect what we must, but also consider what we can offer in the broader context of the talks,' Mr Yeo had earlier told reporters.
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The outcome of the negotiations carries high stakes for South Korea, where exports made up more than 40 per cent of GDP last year.
As a key exporter of semiconductors, smartphones, automobiles, and batteries, any disruption to Korean shipments threatens to reverberate across global supply chains.
To boost its bargaining position, Seoul is also exploring participation in a US-backed Alaskan gas project, potential cooperation in shipbuilding, industrial revitalisation, and regulatory changes to improve access for US tech firms.
Defence burden-sharing is another sensitive area.
Mr Trump has long pushed allies to increase their financial contributions to hosting American troops, and a modest boost in South Korea's share could help reduce friction in the broader talks. So far, Mr Lee has advocated for sticking with a five-year cost-sharing deal reached in October 2024, though his team has had discussions with US counterparts on the topic.
Still, the priority is protecting industrial heavyweights.
Autos account for more than a quarter of South Korea's exports to the US, and the nation's carmaker Hyundai Motor faces elevated risks due to its reliance on domestic production despite recent US investment pledges.
Now, Mr Trump is also escalating the pressure on sectors previously considered less exposed: semiconductors and pharmaceuticals.
The president has indicated that tariffs on both drugs and chips could take effect as early as the start of August. Those measures may be imposed alongside the higher reciprocal tariffs.
The scope of these new duties could be wide. Korean pharmaceutical firms such as Celltrion and SK Biopharmaceuticals are among those expressing concerns over the measure, while the proposed chip duties might impact not only components but also finished products including smartphones and laptops from Samsung Electronics.
Although some analysts expect Washington may ultimately favor investment incentives or import quotas in these sectors, the risk of outright tariffs is growing.
Many Korean firms have built joint ventures in the US, particularly in cars and batteries, but their core supply chains remain rooted at home.
After two trips to Washington since June, Trade Minister Yeo has emphasized that the talks should not be viewed as a zero-sum game. He advocates for a 'positive-sum' outcome, in which both sides walk away with mutual gains through deeper industrial and regulatory cooperation.
But scepticism is mounting as time runs short and coordination among Korean ministries remains fragmented.
'From what we're seeing, this is less of a negotiation and more of a one-sided demand,' said Mr Park Sanghyun, an economist at iM Securities. 'At best, we might be able to shave the proposed 25 per cent rate down to something below 20 per cent, but the idea of avoiding sectoral tariffs altogether seems unlikely.' BLOOMBERG
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Prices (without grants) range from $212,000 to $354,000 for a two-room flexi flat, $406,000 to $514,000 for a three-room unit, and $583,000 to $777,000 for a four-room flat. For comparison, three-room resale flats in Toa Payoh transacted at between $780,000 - $830,000, and four-room resale flats at between $1.07 million and $1.17 million, said HDB. From July's BTO exercise, the new Family Care Scheme comes into effect. Under the scheme, first-timer singles will be granted priority access within the existing quota for single buyers when they buy a two-room flexi flat near or with their parents. A second component of the scheme, which grants singles priority if they jointly apply for two units in the same BTO project with their parents, will kick in from the October sales exercise. There will be no change to the existing priority access for married couples and seniors - up to 30 per cent of flat supply in a BTO launch is allocated to first-timer families, while at least 40 per cent of two-room flexi flats are set aside for seniors. Another change that takes place from this sales exercise is a larger allocation quota for second-time home buyers applying for three-room and larger flats. Up to 20 per cent of three-room Standard flats and up to 10 per cent of three-room Plus and Prime flats and four-room and larger flats would be set aside for second-timer families. First-timer families would still have at least 80 per cent to 90 per cent of three-room and larger flats set aside for them. The deferred income assessment criteria was also relaxed from this sales exercise, allowing couples the option to delay their income assessment for a housing loan until just before they collect the keys to their flat, as long as one party is a full-time student or national serviceman. Previously, both parties needed to meet this requirement. Lastly, the Fresh Start Housing Grant was increased from $50,000 to $75,000 for eligible families who are second-time home buyers currently living in public rental flats. The grant will help them to buy a new two-room flexi or three-room standard BTO or balance flat on a shorter lease. HDB said applicants who wish to improve their chances of securing a flat are encouraged to apply for Standard flats, where at least 90 per cent of the four-room and larger flats are set aside for first-timer families. Flat applications will close at 11.59pm on July 30 on the HDB Flat Portal. In the next BTO exercise in October, HDB will offer about 9,100 flats in Ang Mo Kio, Bedok, Bishan, Bukit Merah, Jurong East, Sengkang, Toa Payoh and Yishun. A fifth assisted living project in Sengkang will also be on offer.
