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Analysis-South Korea political turmoil pushes companies to take tariff matters into their own hands
A container ship leaves Pusan Newport Terminal in Busan ·Reuters
Hyunjoo Jin
4 min read
By Hyunjoo Jin
SEOUL (Reuters) - South Korea's business leaders are taking action to offset the threat posed by U.S. President Donald Trump's aggressive trade policies, hiring his former aides and lobbying Republican states out of frustration with delays by their own government which is mired in a political crisis.
Trump's sweeping and sometimes indiscriminate trade measures have sparked existential debate in many international capitals over how much they can depend on the U.S. from trade to politics.
While it remains to be seen how the upheaval may affect the long-standing alliance and close economic relationship between Washington and Seoul, the stakes are higher for South Korea than other countries, as it grapples with the worst political crisis in decades after impeached President Yoon Suk Yeol briefly imposed martial law on December 3.
Yoon's policy to grow more closely aligned with Washington amid trade tensions between China and the U.S. has also increased South Korea's reliance on the U.S. market, which accounted fornearly 20% of its total exports last year, leaving its businesses more vulnerable to potential tariff changes.
"We are frustrated," an executive at a major business conglomerate said, asking not to be identified due to the sensitivity of the subject.
The executive said the government has not discussed any concrete plans to bring Trump to the negotiating table at meetings it held with corporate representatives.
South Korean companies are also worried that they do not have enough backing from the government, when leaders of other countries including Japan and India have already met Trump and seek to stave off damaging U.S. tariffs, company officials said.
South Korea's Acting President Choi Sang-mok has yet to speak directly with Trump, and told lawmakers earlier this month that there are restrictions in the way the acting leadership can respond to U.S. tariff system changes. He said Korea can leverage its U.S. investments and energy imports in potential negotiations.
South Korea's industry minister will travel to the U.S. this week to press again for an exemption from steel tariffs and discuss ways to boost cooperation in energy and shipbuilding, the ministry said on Tuesday.
Amid uncertainty over how quickly the domestic political crisis would end, the country's business association sent a delegation of executives from major companies such as Samsung, LG, SK and Hyundai Motor to Washington last week and met U.S. Secretary of Commerce Howard Lutnick, two sources familiar with the matter said.
At the meeting, Lutnick encouraged investment in the U.S., according to one of the sources. It was not immediately clear what the Korean delegation team had requested.
Companies are also arranging separate meetings to connect with U.S. government officials.
"We’re having dialogue with the new U.S. administration to reinforce our significant investments, job creation and economic impact," Jose Munoz, Hyundai Motor's former U.S. chief who was promoted as the South Korean firm's first foreign CEO in November, said in a letter to shareholders earlier this month.
Hyundai also promoted Sung Kim, a former U.S. diplomat during Trump's first term, to president in charge of global government affairs in November.
The company is looking to hold a car factory opening ceremony in Georgia, three people familiar with the matter told Reuters, with two of them saying the automaker is seeking to invite Trump to the event.
Autos, semiconductors and steel, which are being reviewed by the Trump administration for import levies, are among South Korea's major industries.
Hyundai said no decision has been made about the ceremony.
The executive at a major business conglomerate said its affiliates are also considering holding an outreach event in Tennessee to tout their combined investments in the Republican state as part of efforts to gain political influence at the federal level.
IN A BIND
Analysts expect a court decision to be made in March on whether to oust Yoon or restore his presidential powers. If he's removed from the office, an election to pick a new president should be held within 60 days.
In 2017, when Trump started his first term, then President Park Geun-hye was going through an impeachment trial.
But the Trump administration moved more gradually with his tariff policies, giving South Korea some time to maneuver, said former trade minister Yeo Han-koo, helping it win an exemption to steel tariffs in return for a quota that put a cap on export volumes to the U.S.
"Now they are moving at lightning speed," Yeo said.
A Seoul government official said it is "having a lot of difficulties," and there are concerns that the next president may not follow through on commitments the current interim government would make with the U.S., for example.
Scott A. Snyder, president of the Korea Economic Institute of America (KEI), a Washington-based think tank, said that a major impediment is there is no leader-to-leader communication between the two countries.
"That is something that just has to wait," he said, adding it would be better for Korea "to lie low and to avoid picking its head up in many of these sectors."
(Reporting by Hyunjoo Jin, Cynthia Kim and Heekyong Yang and Josh Smith; Editing by Miyoung Kim and Kim Coghill)
