South Korea’s Response to U.S. Demands: Minimize Risk, Maximize Reward

South Korea's Response to U.S. Demands: Minimize Risk, Maximize Reward

Photo: MANDEL NGAN/AFP/Getty Images

A unique set of circumstances, however, left South Korea ill-prepared to manage the onset of the new U.S. administration in January 2025. President Yoon Suk Yeol's declaration of martial law, his subsequent impeachment, and the snap election of President Lee Jae Myung effectively left South Korea in political stasis for the first half of 2025 and, therefore, six months behind all other U.S. allies as President Trump began his second term with a slew of trade actions and executive orders. Even after Lee took office, the two leaders missed opportunities to meet in the summer of 2025 at the G7 summit and NATO leaders summit, leaving Seoul without the direct leader-to-leader interface enjoyed by other similarly affected allies deemed critical to negotiating relief from U.S. tariffs.

The Trump Administration's Policies: Paradigm Shift

Two policies define the paradigmatic shift in the alliance. The first relates to Trump's desire to reduce the U.S. military force presence on the peninsula. Currently, 28,500 U.S. ground troops in South Korea provide the trip wire deterrent at the heart of the U.S.-ROK mutual defense treaty, as well as the nuclear extended deterrence commitment. In May 2025, news reports surfaced of an administration plan to reduce the number of ground troops in South Korea, with the initial removal of one rotational brigade from the peninsula. The Pentagon denied the story, but there are a number of reasons to believe its veracity. First, as highlighted in a CSIS database, Trump has long questioned the need for U.S. troops abroad in Germany and South Korea, which he sees as expensive for the United States and as encouraging free riding by allies. Second, senior Pentagon officials prioritize deterrence and defense against China in the Taiwan Strait and in the first island chain and require South Korea to carry the burden of deterrence against North Korea.

The second paradigmatic shift in U.S. policy for South Korea relates to tariffs. Trump's policies have thrust the trade relationship into an entirely new world. U.S.-South Korea bilateral trade (goods and services) was worth $239.6 billion in 2024, making the United States South Korea's second-largest export market and South Korea the United States' sixth-largest trade partner. Despite a successful FTA that took bilateral tariff rates to nearly zero, Trump targeted South Korea's $66 billion merchandise trade surplus as validation that allies cheat the United States on trade while free riding off U.S. security guarantees. The April Liberation Day reciprocal tariff of 25 percent against South Korea took no account of the preexisting FTA; moreover, the impact on South Korea went far beyond the bilateral tariff. The Section 232 25 percent tariffs on steel and aluminum, the 25 percent tariffs on automobiles and auto parts, and the 25 percent tariffs on Mexico (from where South Korean plants export to the United States) all had a disproportionate effect on the country. The impact was immediate: South Korea's car exports to the United States fell by 27 percent in May year on year, with overall exports to the United States falling by 8.1 percent year on year. While there are other issues in the alliance, these troop and tariff issues are of a scale never before experienced in the alliance, and Seoul, mired in its own political crisis, was unprepared to respond.

Responses from South Korea: Let's Make a Deal

If the initial reaction by European and Canadian allies to Trump's actions was outrage and resistance, South Korea's response could be characterized as "let's make a deal." On the reciprocal tariffs, South Korea did not criticize its ally; it did not call out the United States for unduly violating the existing FTA, and it did not retaliate by raising its own tariff rates to 15 or 25 percent (from 0 percent). Instead, Seoul reached out proactively to identify the makings of a deal that would lower U.S. tariffs. From February to June 2025, South Korean senior trade officials, and even the national security adviser and foreign minister, shuttled to Washington almost weekly, even following Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Grier to Scotland to meet for late-night additional negotiations. There was arguably no U.S. trading partner that tried harder to make a deal. This resulted in a framework agreement announced by President Trump on July 30 that reduced the reciprocal tariff rate to 15 percent and lowered the sectoral tariff for automobiles and auto parts to 15 percent. South Korea promised a $350 billion investment fund for U.S.-owned companies-including $150 billion in shipbuilding-and an additional $100 billion in energy purchases from U.S. sources. The magnitude of these commitments spoke to South Korea's willingness to make a deal to satiate its ally; $350 billion is 72 percent of the South Korean government's budget this year, and more than 18 percent of South Korea's GDP in 2024.

At the same time, Seoul has taken advantage of the Trump administration's willingness to operate outside regular policy conventions to seek new opportunities for alliance cooperation that serve ROK interests. Most notably, the $350 billion investment package includes $150 billion for South Korean investment in U.S. shipbuilding. The commercial potential for joint ventures in shipbuilding, ROK-made components for U.S. ships, and maintenance, repair, and overhaul (MRO) have all been areas of commercial interest and strategic cooperation for South Korea, given the strength of its shipbuilding industry and the United States' shipbuilding gap with China.

On security issues, the Lee government has avoided disagreement with Trump, instead identifying positive-sum solutions that advance U.S. and South Korean goals. The South Korean government maintained message discipline with the Pentagon's denial of the veracity of the troop withdrawal reports. In return, when Trump was asked about the issue during the August 2025 summit meeting, he deflected the question to talk instead about North Korea. President Lee has also recognized the U.S. desire to see more South Korean alignment on security issues vis-à-vis China. In a public speech at CSIS following his meetings at the White House, Lee made a clear statement of Seoul's position that aligned with U.S. interests, stating that although China and South Korea share "inevitable ties" because of geographic proximity, South Korea "cannot act or make decisions that go against America's basic policy stance." Furthermore, he said it's "no longer possible" for South Korea to hedge between economic interests with China and security interests with the United States.

This position reflects South Korea's understanding of its responsibility to minimize damage to alliance equities in the face of an "America First" posture that effectively throws custodial responsibility into Seoul's hands.

South Korea can ill afford disruptive relations with its primary security patron, no matter how much that disruptiveness emanates from Washington.

Yet South Korea has also been able to use the unconventionality of the Trump administration to advance its own agenda. Progressive ROK governments like Lee's traditionally have sought to improve relations with North Korea through inter-Korean engagement and reconciliation. In a wide-ranging and unusually long Oval Office press availability, Lee drew the U.S. president into a discussion of North Korea by appealing to two well-known preoccupations of the president: the Nobel Peace Prize and real estate. Lee called the president a "maker of peace" and asked him to build peace on the Korean Peninsula. He also called on the president to build a Trump Tower and play golf in North Korea and said he believes Kim Jong-un "will be waiting for you." These entreaties prompted Trump to launch into long statements about his friendship with the North Korean leader and his willingness to reengage, committing to do so by the end of 2025. If Lee's purpose was to send a public message to Kim of the U.S.-ROK desire to reengage with the North, this was successfully accomplished at the summit-not necessarily by tricking the U.S. president into such statements, but by once again capitalizing on Trump's unconventionality to identify positive-sum solutions.

The natural question that emerges is why the ROK has exhibited such a cooperative, if not submissive, attitude to nontraditional, paradigm-shifting U.S. policy demands. For one, South Korea's geopolitical position affords it little leeway. Seoul faces a conventional and nuclear threat across its border in North Korea, as well as threats from China. The revival of deep Russia-North Korea ties because of the war in Ukraine amplifies the threat. In such an environment, South Korea can ill afford disruptive relations with its primary security patron, no matter how much that disruptiveness emanates from Washington. This in part explains the immediate desire to negotiate a solution that appeases U.S. demands.

Second, the legacy of the hub-and-spokes alliance system created by the United States in the postwar period still impacts the way states in the region behave. Allies like Japan and South Korea customarily operate in a bilateral context when it comes to alliance issues, rather than multilaterally. For example, even though Seoul and Tokyo both faced reciprocal tariffs from Trump, their initial instinct was not to collude in order to gain leverage vis-à-vis the common ally; rather, each chose to work the issues alone, thereby giving the bargaining leverage to the United States. Finally, "America First" policies put demands on allies that push past normal alliance conventions. This effectively puts the burden of responsibility for maintaining the alliance's well-being in the hands of the U.S. partner, which must respond in measured rather than retaliatory ways if it wants to preserve the alliance's equities for the future.

Implications for the United States and Recommendations

With five years left in the new Lee government and over three years remaining in Trump's second term, there are opportunities to preserve and advance the alliance despite the complexities created by U.S. demands and a worsening external security environment.

1. Create a joint vision document. The August 2025 summit between Trump and Lee, while good on optics, lacked a written joint statement or fact sheet. This is unusual given that the first meeting between heads of state usually affords a proper opportunity to agree on a document that will guide the alliance for the remaining years of the two presidents. Ironically, the agreement was held up not by security issues-where the two sides found mutually acceptable language-but on the details of the investment commitments made by South Korea on issues like profit-sharing and terms of investment. It is imperative to reach compromises on these issues that benefit both allies; otherwise, they will impede more important agreements on strategic goals.
2. Focus on alliance modernization. Any changes in U.S. force posture on the Korean Peninsula must be executed as part of a broader package of alliance modernization initiatives rather than as discrete and unilateral actions by the United States. While such moves may be part of a broader Pentagon objective of enhancing regional capabilities to deter and defend against contingencies with China over Taiwan, they will come at the expense of weakened deterrence on the Korean Peninsula. South Korea will sense acute abandonment, and North Korea will see potential opportunity in weakened U.S. security commitments. Instead, any changes in force posture should be made in conjunction with enhancements in U.S. air and naval presence; enhanced South Korean intelligence, surveillance, and reconnaissance (ISR) and conventional capabilities; and other actions that ensure stable deterrence. The presentation of such a package to the public is as important as the substance for the purpose of maintaining deterrence.
3. Approach South Korean contingency planning with caution. South Korea has not exhibited alternative contingency planning in its dealings with the United States thus far. One might expect that as Washington raises abandonment fears in Seoul with talk of troop withdrawals or tariffs, South Korea might hedge its bets by drawing closer to alternative partners like China. Instead, as noted above, the Lee government has committed to doubling down on relations with the United States. The one area where the United States should be wary of South Korean interests is in renegotiating the bilateral civil nuclear agreement. Seoul has expressed interest in revisiting the agreement, which is now 10 years old, most likely as it pertains to reprocessing capability that was banned in previous agreements. While there may be several arguments for reprocessing proffered by South Korea (including storage limitations for spent fuel), the objective of acquiring a virtual nuclear capability with fissile material stockpiles (similar to Japan) may be more pronounced given uncertainties surrounding the alliance.
4. Better communicate and align policies. The alliance suffered a major and ill-timed embarrassment when the Trump administration's immigration and investment policies came into direct conflict in the September 2025 Immigration and Customs Enforcement raid of a Hyundai-LG battery plant in Georgia. While the United States must enforce any violations of its visa policies by foreign workers, the detainment of 317 Korean workers led to the suspension of South Korean investments and undercuts President Trump's broader objective of securing over $500 billion in FDI to bring manufacturing back to the United States and hire American workers. While the immediate task for the allies from the Hyundai raid is to negotiate a visa infrastructure appropriate for the volume of South Korean investment and business travel to the United States, the broader one is to align policies that avoid undercutting President Trump's major objectives with his allies.
5. Foster U.S.-Japan-Korea trilateral cooperation. There is an opportunity to advance trilateral cooperation among the three allies that has been presented by the Lee government's willingness to defy the traditional progressive mandate for more antagonistic relations with its former colonizer. Lee signaled this early in his election campaign and followed through with his first foreign visit to Tokyo in August 2025 to meet Prime Minister Ishiba Shigeru before coming to Washington. The Trump administration also supports trilateral alliance security and intelligence coordination, which it believes was hatched in earnest during Trump's first term in office and then expanded during Biden's term. Given the difficult external environment, the growing ties between China, Russia, Iran, and North Korea, and uncertainties about the U.S. force posture changes, doubling down on trilateral relations seems more than appropriate.
6. Pursue new frontiers of cooperation. Trump's tariff pressures will certainly complicate alliance relations, but his nontraditional foreign policy approaches open new areas of cooperation for the alliance. As noted above, shipbuilding is an area of real mutual gains for the two allies, and Trump would not necessarily be constrained by long-standing guidelines limiting the U.S. partnerships with foreign shipbuilders. The allies also share a mutual interest in reducing South Korea's dependence on politically unstable supplies of energy from Russia and the Middle East. The commitments made during the August 2025 summit for South Korean purchases of U.S. energy (specifically liquefied natural gas) constitute important steps in this direction, provided the details can be successfully negotiated between the two sides.

Victor Cha is president of the Geopolitics and Foreign Policy Department and Korea Chair at the Center for Strategic and International Studies (CSIS) in Washington, D.C.