Trump Pursues Trade Agreements Amid Regional Tensions in South Korea

Donald Trump arrived in Gyeongju, South Korea, on July 27, 2019, following a significant missile test by North Korea. The U.S. President was welcomed by South Korean Prime Minister Lee Nak-yon ahead of crucial discussions with Chinese President Xi Jinping regarding trade and economic relations. During an in-flight press briefing on Air Force One, Trump downplayed the missile test, stating that his focus remained on enhancing ties with China.

Trump expressed optimism about achieving a beneficial outcome for both the United States and the global economy. He indicated plans to reduce U.S. tariffs on Chinese goods as part of negotiations, contingent upon China’s agreement to limit exports of fentanyl precursor chemicals. Reports from the Wall Street Journal suggested that the U.S. could potentially halve the current 20% tariffs imposed on Chinese imports.

Challenges in South Korea Trade Talks

While addressing a summit of APEC CEOs, Trump mentioned that a trade deal with South Korea was close to completion. Nevertheless, both U.S. and South Korean officials have tempered expectations for immediate progress during this week’s meetings. Recently, the two nations agreed to a framework allowing South Korea to avoid the brunt of tariffs by investing $350 billion into the U.S. economy. However, discussions about the specifics of these investments have stalled.

During his meeting with Lee at the National Museum, Trump was honored with the “Grand Order of Mugunghwa,” South Korea’s highest award. Lee committed to increasing defense spending, a move aimed at addressing Trump’s ongoing concerns that U.S. allies are not contributing sufficiently to their own defense. Additionally, Lee requested U.S. approval to reprocess nuclear fuel for submarine power, which currently requires U.S. consent under existing agreements.

Trump offered to assist in resolving South Korea’s longstanding issues with North Korea, which remains technically at war with the South since the armistice in 1953. Despite expressing a desire to meet with North Korean leader Kim Jong Un during this trip, Trump acknowledged that scheduling conflicts would prevent such a meeting.

Trade and Security Discussions on the Horizon

As Trump prepares for a dinner with Lee and bilateral talks with multiple leaders, including Xi, he has opted out of participating in the main APEC summit. U.S. officials confirmed that discussions between the two largest economies have resulted in a framework to suspend further tariff escalations and controls on the export of Chinese rare earths, which contributed to a surge in stock markets.

Trump plans to address concerns regarding Nvidia’s advanced AI chips, with the sale of these products to China being a significant topic in trade negotiations. His stance on Taiwan has fluctuated, especially as he seeks to finalize a trade agreement with China. He noted that Xi assured him there would be no Chinese invasion of Taiwan during his presidency, although Trump has not yet authorized any new arms sales to the island. Taiwan’s Foreign Minister, Lin Chia-lung, expressed confidence that Trump would not abandon the island in his discussions with Xi.

Trump’s visit marks a conclusion to his tour of Asia, which has been characterized by strong reactions to his tariff policies and the ongoing U.S.-China competition. In previous stops, he secured various trade agreements in Malaysia and praised Japan’s Prime Minister Sanae Takaichi for her commitment to military expansion and economic collaboration. The U.S. and Japan also announced numerous projects in which Japanese firms are looking to invest in the U.S., connected to Japan’s earlier pledge of $550 billion in strategic investments, loans, and guarantees.

While negotiations continue, both the U.S. and South Korea remain cautious about the feasibility of the substantial financial commitments that have been proposed.