Why South Korea, by Not Using the KORUS FTA, Is Becoming Isolated in the Tariff War
Now that the Trump administration is hardening tariffs from "temporary structures" into concrete, South Korea alone remains silent without using its KORUS FTA card. Meanwhile, Canada and Mexico have begun to use the USMCA as a negotiating weapon.
> The KORUS FTA has been a negotiating card that no one has used for 18 months.
Key points of this article
・South Korea is the only country not using its FTA for negotiations
・The Coupang issue symbolizes the absence of dialogue
・The structure of silence accelerates the solidification of tariffs
What happened
The U.S. currently has FTAs with 20 countries. Among them, only Canada, Mexico, and South Korea conduct trade with the U.S. on a meaningful scale in the manufacturing sector. Canada and Mexico have begun to utilize their FTA for tariff negotiations through USMCA review meetings. Only South Korea, amidst the 18-month Trump tariff shock, has hardly mentioned the KORUS FTA. Mr. Trump announced that he had agreed on a 15% reciprocal tariff with South Korea. Furthermore, the U.S. is showing signs of imposing an additional 12.5% tariff on South Korea under the pretext of "forced labor."
Why couldn't South Korea use its hand?
It is believed that within the South Korean government, there was a judgment that "there is no point in bringing up the FTA." Because the Trump administration showed a stance of prioritizing "deals" over multilateral or bilateral legal frameworks, they may have read that bringing up legal grounds would only stiffen negotiations. As a result, the very venue for discussion was lost.
The cost of that judgment is most visible in the Coupang issue. South Korea's largest online retailer, Coupang, is a U.S.-owned firm, and its handling of a personal data breach developed into a diplomatic and trade friction between South Korea and the U.S. It reached a point where South Korean Ambassador to the U.S. Cho Hyun-dong had to hold a press conference to put out the fire, stating that he would "manage it so it does not affect South Korea-U.S. relations." This is a typical example of a problem that could have been resolved early becoming bloated due to the absence of regular communication channels.
From the perspective of law and regulation, the KORUS FTA has built-in dispute resolution mechanisms and frameworks for regular consultations. However, as Professor Lee Jae-min of Seoul National University's School of Law points out, this "infrastructure" is barely functioning even within South Korea. Clauses that could be used as a timeline to encourage inter-departmental coordination remain dormant.
Looking at the industry as a whole, Coupang's stock price has
fallen 44%
from its peak and shows no signs of recovery. It is not just an individual company's problem; the result of the dialogue mode between South Korea and the U.S. entering "power-saving mode" is seeping into the stock market. If the U.S. moves to fix and normalize tariffs, South Korea's entire manufacturing industry will be forced to restructure its cost structure.
Reinterpreting this structure as the risk of an absent negotiating table
What I felt during my time as a consultant was the fact that "a framework you don't use is the same as one that doesn't exist." In a manufacturing project for a client, even though price revision clauses were clearly stated in the existing trade contract, three years passed without anyone bringing them up. The hesitation that "bringing it up now would worsen the relationship" gradually solidified unfavorable conditions. I see the 18-month silence on the KORUS FTA as having the same structure as that case.
What I am focusing on is the point that an FTA functions not as a "negotiating tool" but as "infrastructure to maintain a venue for dialogue." Canada and Mexico are moving the USMCA review meetings not just to lower tariffs, but to secure the "right to keep sitting at the table." If South Korea continues to accept 15% reciprocal tariffs and 12.5% additional tariffs while leaving that seat empty, those numbers will eventually become the default.
One more point I confirmed through the Coupang issue is the reality that "the boundary between private sector issues and diplomatic friction is disappearing." Even for a company with a U.S. parent, a personal data breach that occurred within South Korea was directly linked to South Korea-U.S. trade issues. From now on, compliance issues at the corporate level will immediately rise to the level of bilateral political agendas. Based on that premise, I believe it is necessary to rethink the KORUS FTA consultation framework as an "early warning system."
If you want to understand the tariffs the Trump administration is rolling out in detail, "Trump 2.0: The New U.S.-China Cold War and How to Prepare for the Unpredictable," which can be read alongside the structure of the new U.S.-China Cold War, serves as a map. It concretely organizes the background of the international environment that gave birth to South Korea's FTA silence.
Silence was not a strategy, but a voluntary exit from the table.
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