South Korea vows to fix regulations after Trump's new deadline
'We see this letter as a de facto extension of the grace period for imposing reciprocal tariffs until Aug 1,' South Korea's Industry Ministry said on Tuesday (Jul 8), vowing to accelerate negotiations to reach a mutually beneficial agreement.
The 25 per cent across-the-board tariff announced by Trump on all shipments from South Korea is the same with the level which was set to be implemented on Jul 9, barring a deal.
'Please understand that these tariffs are necessary to correct the many years of Korea's Tariff, and Non-Tariff, Policies and Trade Barriers, causing these unsustainable Trade Deficits against the United States,' Trump said in the letter posted on social media Truth Social.
South Korea's negotiations with the US have been hampered by six months of domestic turmoil following former president Yoon Suk-yeol's attempt to impose martial law. The administration of newly installed President Lee Jae-myung is now playing catch-up as multiple nations face US pressure to sign off on deals.
The letter was unveiled just as South Korea's top trade and security officials were in Washington in a last-minute bid to avert the punitive tariffs.
'We will use this opportunity to advance key industries through the manufacturing renaissance partnership between our two countries, while also enhancing domestic systems and regulations – areas of particular interest to the US in its efforts to reduce trade deficits,' the ministry said.
The US is South Korea's second-largest export destination after China, accounting for 18.7 per cent of outbound shipments worth US$127.8 billion last year. The Office of the US Trade Representative said the country ran a US$66 billion trade deficit with South Korea in 2024, its eighth-largest bilateral gap. That was bound to draw the attention of Trump, who has framed persistent trade shortfalls as a national emergency.
Failure to secure a deal during the extended grace period is set to deepen the drag on a trade-dependent economy that shrank in the first quarter. Exports remain vital to South Korea's economy, equivalent to more than 40 per cent of gross domestic product last year. Its supplies of chips, smartphones, cars and batteries are also key elements for global supply chains. BLOOMBERG
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