The United States and South Korea have advanced trade talks, addressing details of $350bn that would be invested in the US economy, after negotiations and ceremonies that included the presentation of a gold medal and crown to US President Donald Trump.
Both were gifts from the country’s president, Lee Jae Myung, who dialled up the flattery while Washington and Seoul worked to nail down financial promises during the last stop of Trump’s recent Asia trip.
Although both sides said progress has been made — Trump said things were “pretty much finalised” — no agreement has been signed yet. The framework includes gradual investments, cooperation on shipbuilding and the lowering of Trump’s tariffs on South Korea’s automobile exports, according to Kim Yong-beom, Lee’s chief of staff for policy. The White House did not immediately respond to a request for comment.
Kim said the two countries have agreed to keep reciprocal tariffs at 15 percent, as they have been since August, and further agreed to apply that rate to automobiles and auto parts, South Korea’s largest exports to the US. Autos and parts had been facing a 25 percent tariff, putting automakers such as Hyundai and Kia at a disadvantage against Japanese and European competitors, which face tariffs of 15 percent.
Despite the lack of immediate confirmation from US officials on those points, it was apparent progress had been made on difficult issues after a day of adulation for the visiting US president from his hosts.
There was a special lunch menu featuring US-raised beef and a gold-adorned brownie. A band played Trump’s campaign anthem of “YMCA” when he stepped off Air Force One. Lee told him, “You are indeed making America great again.”
Trump can be mercurial and demanding, but he has a soft spot for pomp and circumstance. He was particularly impressed by a choreographed display of colourful flags as he walked along the red carpet.
“That was some spectacle, and some beautiful scenes,” Trump told Lee during their meeting. “It was so perfect, so flawlessly done.”
Earlier in the day, Trump even softened his rhetoric on international trade, which he normally describes in predatory terms, where someone is always trying to rip off the US.
“The best deals are deals that work for everybody,” he said during a business forum.
Risks for South Korea
Trump was visiting while South Korea is hosting the annual Asia-Pacific Economic Cooperation (APEC) summit in the historical city of Gyeongju. He previously stopped in Japan, where he bonded with the new prime minister, and Malaysia, where he attended a summit of the Association of Southeast Asian Nations.
The Republican president has been trying to tie up trade deals along the way, eager to show that his confrontational approach of tariffs is paying dividends for Americans who are uneasy about the job market and watching a federal government shutdown extend into its fifth week.
However, South Korea has been particularly tough to crack, with the sticking point being Trump’s demand for $350bn of direct investment in the US.
Korean officials say putting up cash could destabilise their own economy, and they’d rather offer loans and loan guarantees instead. The country would also need a swap line to manage the flow of its currency into the US.
Trump, after meeting with Lee, said “We made our deal pretty much finalised.” He did not provide any details.
Oh Hyunjoo, a deputy national security director for South Korea, told reporters earlier in the week that the negotiations have been proceeding “a little bit more slowly” than expected.
“We haven’t yet been able to reach an agreement on matters such as the structure of investments, their formats and how the profits will be distributed,” she said on Monday.
It’s a contrast from Trump’s experience in Japan, where the government has worked to deliver the $550bn in investments it promised as part of an earlier trade agreement. US Commerce Secretary Howard Lutnick announced up to $490bn in specific commitments during a dinner with business leaders in Tokyo.
Lee, speaking at the business forum before Trump arrived, warned against trade barriers.
“At a time when protectionism and nationalism are on the rise and nations focus on their immediate survival, words like ‘cooperation,’ ‘coexistence’ and ‘inclusive growth’ may sound hollow,” he said. “Yet, paradoxically, it is in times of crisis like this that APEC’s role as a platform for solidarity shines brighter.”
Shower of gifts
Lee took office in June and had a warm meeting with Trump at the White House in August, when he praised Oval Office renovations and suggested building a Trump Tower in North Korea.
He took a similar approach when Trump visited on Wednesday. The gold medal presented to Trump represents the Grand Order of Mugunghwa, the country’s highest honour, and Trump is the first US president to receive it.
Trump said “It’s as beautiful as it can possibly be” and “I’d like to wear it right now.”
Next was a replica of a royal crown from the Silla Kingdom, which existed from 57 BC to 935 AD. The original crown was found in a tomb in Gyeongju, the kingdom’s capital.
Besides trade disagreements, there have been other points of tension between Washington and Seoul this year. More than 300 South Koreans were detained during a US immigration raid on a Hyundai plant in the US state of Georgia in September, sparking a sense of outrage and betrayal.
Lee said at the time that companies would most likely hesitate to make future investments unless the visa system was improved.
“If that’s not possible, then establishing a local factory in the United States will either come with severe disadvantages or become very difficult for our companies,” he said.
Asked on Monday about the immigration raid, Trump said, “I was opposed to getting them out,” and he said an improved visa system would make it easier for companies to bring in skilled workers.
While in South Korea, Trump is also expected to hold a closely watched meeting on Thursday with Chinese leader Xi Jinping. Washington and Beijing have clashed over trade, but both sides have indicated that they’re willing to dial down tensions.
Trump told reporters aboard Air Force One on Wednesday that he expects to lower tariffs targeting China over the flow of ingredients used in the manufacture of the drug fentanyl.
“They’ll be doing what they can do,” he said. Trump added that “China is going to be working with me.”
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