Contrary to Trump’s claim, Korea’s tariffs on U.S. imports nearly eliminated under bilateral FTA

The Korean government was put on the defensive during U.S. President Donald Trump’s address to a joint session of Congress on Tuesday as he name-checked the country for imposing high tariffs and benefiting from U.S. troops.

The president also vowed to eliminate subsidies under the CHIPS and Science Act, which could take away multi-billion-dollar funding promised to Korean chipmakers like Samsung Electronics and SK hynix.

In his first congressional address since returning to the White House, Trump argued that his tariff measures could attract investments in chip manufacturing facilities in the United States even without the financial incentives.

“We don’t have to give them money; we just want to protect our businesses and our people, and they will come because they won’t have to pay tariffs if they build in America,” he said, “You should get rid of the CHIPS Act and whatever’s left over, Mr. Speaker, you should use it to reduce debt.”

Trump Misstates Korea’s Tariff Policies

Speaking about what he calls “unfair” charges, Trump accused Korea of imposing excessively high tariffs on U.S. products despite benefiting from its alliance with the United States.

“And South Korea’s average tariff is four times higher. Think of that. Four times higher. And we give so much help militarily and in so many other ways to South Korea,” he said.

Multiple government departments issued a joint statement saying that Trump’s comment conflicts with the facts, given that Korea levies an average tariff of less than 1 percent due to their bilateral FTA.

“Under the Korea-U.S. FTA, which came into effect in 2012, both countries have eliminated tariffs on most goods,” the statement read. “As of 2024, Korea’s effective tariff rate on U.S. imports stands at approximately 0.79 percent,” it said.

Trump’s swing at Korea came after taking aim at India and China for their tariff policies, rounding out his grievance with the mention of military assistance for Korea and saying, “This is happening by friend and foe.”

Some analysts believe that the reference to such “help” may have been made as part of a plan to increase the cost borne by Seoul to keep U.S. troops in Korea, even though the two countries signed a five-year plan on the cost just last year, before Trump’s inauguration.

Trump Touts Trillion-Dollar Alaska Gas Pipeline Investment

Another point of contention involves a gigantic natural gas pipeline project in Alaska, as the president announced that Korea and Japan are interested in investing “trillions of dollars” in the initiative, despite doubts about its commercial viability.

“My administration is also working on a gigantic natural gas pipeline in Alaska, among the largest in the world, where Japan, South Korea and other nations want to be our partner, with investments of trillions of dollars each. There’s never been anything like that one. It will truly be spectacular,” he said during his address.

His assured remarks, however, contrast with the cautious tone of Seoul’s industry minister, Ahn Duk-geun, who briefed reporters about the outcome of his recent visit to the United States in Sejong on Tuesday.

“Diversifying [energy] import sources to the United States is considered a very important aspect of energy security, so we are actively reviewing it,” he said, adding, “As for the Alaska project, we are not in a position to comment at this stage,” avoiding a direct answer to the question about Korea’s stance on the project.

“However, it seems to be a high-priority project for the United States.”

The Alaska LNG project, which is designed to transport natural gas from Alaska’s North Slope to international markets, was put on hold until 2020 following the departure of private companies like ExxonMobil and BP.

They expressed concern about profitability given the high estimated construction price, ranging from $39 billion to $44 billion.

Still, experts say that participation is virtually the only option Korea has to lessen its trade surplus with the United States and as a card to respond to the Trump administration’s tariff threats.

“While there are concerns about the economic feasibility of Alaska’s gas development, if utilized effectively from a long-term perspective, it could help develop the U.S.-Korea alliance into a comprehensive security partnership that encompasses economic and energy security,” said Ahn Se-hyun, a professor of International Relations Department at the University of Seoul.

“However, given that this is a complex issue requiring a holistic approach, decisions should be made through a top-down process led by a central command center rather than a single government department,” he said.