Setback for Trump: South Korea calls trade talks ‘very difficult’, deal unlikely before July 9 deadline

South Korea’s president has expressed scepticism that fraught trade talks with the United States can be concluded before Washington’s July 9 deadline to avert steep tariffs, saying that “the two sides are not really clear on what they want”.

President Lee Jae Myung told reporters on Thursday (July 3) that Seoul was “doing its utmost” to find a resolution to negotiations triggered by US President Donald Trump’s threat to impose a 25 per cent “reciprocal” tariff on Asia’s fourth-largest economy.

Delays, uncertainty remains despite Trump’s threats

However, he downplayed expectations of a breakthrough before the US resumes tariffs on multiple countries.

“We are actively identifying and developing many agenda items across various areas,” Lee said. “[But] at this point, it is difficult to say with certainty whether they can be concluded” by the deadline.

His comments followed a fresh warning by Trump earlier this week that he might raise tariffs on Japan to between 30 and 35 per cent from the current 24 per cent. That move has rattled officials in Seoul, who had hoped for a deadline extension.

Trade discussions have already been delayed for months due to political instability in South Korea following the impeachment of Lee’s conservative predecessor Yoon Suk Yeol.

Financial Times cited multiple sources familiar with the talks as saying South Korea had indicated its willingness to address its $55 billion trade surplus with the US. Proposals include increasing purchases of American gas and defence equipment, and removing non-tariff barriers that had been publicly criticised by US Trade Representative Jamieson Greer.

Negotiators are also discussing South Korean investments in US shipyards to help revitalise American shipbuilding, including for the US Navy. Another option under discussion is a Korean commitment to buy gas from a proposed project in Alaska backed by the Trump administration.

However, one source noted that progress on shipbuilding cooperation had been hampered by US protectionist legislation that restricts foreign participation in the sector. Korean companies have also been reluctant to commit to the Alaska liquefied natural gas project, whose commercial viability remains uncertain, according to energy industry experts.

US-South Korea trade

The US accounted for 18 per cent of South Korean exports in 2024, with major goods including cars, auto parts, machinery and intermediate products used in Korean-run manufacturing plants in America.

South Korea already has a comprehensive free trade agreement with the US, under which most tariff rates are supposed to be zero. However, the country is still pushing for the removal of a 25 per cent US tariff on auto imports, which has led to a significant drop in Korean car exports to the American market.

South Korean manufacturers have also been affected by US tariffs on steel and household appliances. Seoul fears additional tariffs on chip and pharmaceutical imports could follow later this year, potentially undermining any deal reached this month.

One person familiar with the discussions said American negotiators had grown frustrated that their Korean counterparts were “not being ambitious enough”. But they also acknowledged that Seoul remained unclear about Washington’s precise demands. “All they know is that whatever it is, the Americans want more,” the person said.