South Korea’s Yoon praises Trump in phone call as trade officials brace for tariffs

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2024.11.07 00:23

By Joyce Lee and Cynthia Kim

SEOUL (Reuters) -South Korean President Yoon Suk Yeol spoke with Donald Trump on Thursday and congratulated him on winning the U.S. presidency on the “Make America Great Again” slogan as officials in Seoul worked to prepare for “significant” economic changes.

Yoon and Trump held a 12-minute phone call and discussed the close security and economic ties of their two countries across all areas, a senior South Korean official said on Thursday.

South Korea’s ambassador to the United States will also visit Trump’s Mar-a-Lago home in Florida to meet with members of the president-elect’s camp, Yonhap news agency reported, citing diplomatic sources.

Trump’s election has renewed attention in South Korea to his “America First” foreign policy plans and how his unpredictable style will play out in his second term.

South Korean officials worked past midnight on Wednesday to prepare for changes expected from U.S. policies, with the Bank of Korea and think tanks seeing a potential hit to exports if the U.S. hikes tariffs.

Meetings at the trade ministry that began in the hours after Trump’s victory led to back-to-back discussions early on Thursday as South Korea’s economic chiefs weighed the impact on exports of tariff levels floated by Trump ahead of the election.

“Should policy stance that has been stressed by president-elect Trump become realized, the impact on our economy is expected to be significant,” Finance Minister Choi Sang-mok said at a 7:30 a.m. (2230 GMT on Wednesday) meeting with trade and foreign ministers in Seoul.

South Korea would probably suffer less than China, Mexico and the European Union, but Asia’s fourth-largest economy could be forced into another renegotiation of its bilateral free trade agreement with Washington, according to Kim Young-gui, an economist at the Korea Institute for International Economic Policy (KIEP).

“Trump’s main target would be the countries that are making surplus in bilateral trade. So Seoul could be asked to re-do the deal again once Washington is done with renegotiating the USMCA (U.S.-Mexico-Canada Agreement),” Kim said.

ECONOMIC BLOW

South Korea’s exports could fall a cumulative $44.8 billion over several years, shrinking its economy an estimated 0.67%, should Trump follow through with his pledge to impose universal tariffs, a report by the KIEP said last week.

Trump has pledged to impose tariffs of as much as 60% on China and a universal 10% tariff on imports from all countries.

China and the U.S. are South Korea’s top two trading partners because of its focus on chips, cars and petrochemicals.

Deputy National Security Adviser Kim Tae-hyo said Trump noted South Korea’s success in shipbuilding and vessel maintenance during the call with Yoon, and said he looked forward to discussing how South Korea could aid the American shipbuilding industry.

Hana Securities analyst Wee Kyung-jae said Trump’s comment likely reflected the weakness of the U.S. shipbuilding industry, which is unable to meet the demands of commercial shipping and the U.S. Navy.

Shares in shipbuilders HD Hyundai Heavy Industries (KS:) and Hanwha Ocean rose more than 10%, while Samsung Heavy Industries (KS:) gained 9%, after Trump’s comment was reported.

ALLIANCE QUESTIONS

Yoon and Trump also shared concerns over North Korea’s deployment of troops to Russia in its war against Ukraine and its continued military provocations such as ballistic missile launches, Deputy National Security Adviser Kim told reporters.

“They shared the view they need to discuss these issues in person and agreed to meet at an early time once they are able to set a date and location.”

The U.S. election and Trump’s run for a second term have been watched closely in South Korea. Yoon has pushed for closer security ties with Washington and for greater three-way cooperation together with Japan.

Yoon told Trump the success of three-way cooperation between South Korea, Japan and the United States was due in part to the foundation laid by Trump’s first presidency.

Trump has accused South Korea, a key Asian ally, of getting a “free-ride” on U.S. military power and demanded it pay far more of the cost of keeping American troops in the country to counter the threat of aggression by North Korea.

On Monday (NASDAQ:) – a day before the U.S. election – South Korea and the Biden administration signed a five-year plan under which Seoul agreed to an 8.3% jump in its 2026 contribution to the cost of maintaining U.S. bases in the country to 1.52 trillion won ($1.09 billion), with future increases capped at 5%.

Later on Thursday at a news conference, Yoon pledged to strengthen the alliance spanning economic and technological cooperation on the global stage.