US–Korea Tariff Negotiation Citation of Doctrine of the Mean chinese philosophy

Minister Kim Jeong-gwan’s Citation of ‘Doctrine of the Mean’ and Philosophical Approach to Negotiations

Minister Kim Jeong-gwan has approached the recent US–Korea tariff negotiations with an unusually philosophical mindset. He famously quoted Chapter 23 of the Confucian classic “Doctrine of the Mean” (중용), saying “If you do your best even in small matters, sincerity becomes apparent, and that sincerity can change the world.” This quote, which he recites often, encapsulates his determination to attend to every detail with utmost sincerity and not lose composure even under pressure . Kim revealed that on his flights to the US he repeatedly watches the historical film “Yeokrin” (역린, The Fatal Encounter) to remind himself of this lesson, resolving that if he puts earnest effort into even the smallest aspects of the negotiation, it might yield positive changes . This patient and measured attitude, he believes, helps pave the way for a win-win agreement by preventing emotional outbursts and ensuring no detail is overlooked.

Kim has also studied the negotiation style of former President Donald Trump. He noted having read Trump’s book “The Art of the Deal” three times, pointing to the maxim “if you want 10, ask for 100” . According to Kim, the U.S. side’s current posture is exactly that – starting with exorbitant demands (asking for “100”) in order to settle closer to their real target (“10”). Armed with this insight, the Korean side has steeled itself not to panic at America’s initial hardline stance, but to respond firmly and rationally. Indeed, when the U.S. came in with very high asks, Kim adopted a tough stance in return, leading to intense bargaining. He candidly shared that during negotiations “voices were raised and I even pounded the table” as both sides pushed their positions . Over the past two months, Kim met U.S. Commerce Secretary Howard Lutnick roughly 20 times, sometimes in heated sessions. Yet even amid shouting matches, Kim maintained focus on finding a “ultimate point of agreement” that both allies could accept . This blend of philosophical calm and occasional tough assertiveness has defined his negotiation style.

Kim’s approach has reportedly made an impression on the American side. On one hand, he continuously emphasizes the importance of the US–Korea alliance and approaches talks with respect and “sincerity”. On the other hand, he stands firm on principles and Korean interests, employing what he calls a dual strategy of “being mindful of the alliance while also holding our ground”. As an example, Kim highlighted Trump’s negotiating philosophy and noted that the U.S. initially set a very high bar (“100”) in demands – to which Korea responded in kind, refusing to be steamrolled. “If the U.S. side makes an unreasonable ask, we will respond firmly,” he said, describing the hard bargaining (“밀고 당기기”) that has ensued  . He even disclosed, “During negotiations, both sides at times raised their voices, and I struck the table in emphasis,” illustrating that Korea has not been passive . Yet, throughout these dramas, Kim insists that he never loses sight of the end goal: “As allies, we’re repeating a process of finding a win-win final agreement” . This mindset – passion balanced by composure – is very much in line with the Confucian “middle way” he espouses.

Despite Korea’s passionate defense of its interests, the U.S. side has remained extremely tough. Secretary Lutnick has publicly warned, “Korea must accept the agreement or pay the tariffs – there is no flexibility” . He explicitly cited Japan’s example of acquiescence and threatened that if Korea doesn’t agree to similar terms, the U.S. will revert to the original 25% tariff rate  . President Trump, for his part, has occasionally issued hardline demands in the negotiating room – for instance, threatening even higher tariffs on Korean semiconductors or pharmaceuticals than the 25% on autos if Korea doesn’t yield . In essence, the U.S. has been “asking for 100” in line with Trump’s bargaining style, setting an extremely high bar to pressure Korea.

Kim Jeong-gwan’s response to this has been a calibrated one. He toggles between prudence and firmness, adhering to alliance respect on one hand and Korean national interest on the other. He often references the need to remember the broader picture – at one point remarking, “We could endure 25% tariffs if we had to, but this isn’t just a cost issue; it’s about Korea’s future and our alliance relationship” . In other words, he sees the negotiation not just as a haggling over numbers but as a decision that will shape the strategic ties and economic trajectory for years to come. This resolve has kept Korea at the table even when domestic criticism arose about the protracted process. By neither storming out in anger nor capitulating too quickly, Kim’s philosophically informed approach has arguably allowed Korea to extract some concessions and keep the U.S. engaged in finding a compromise. American officials acknowledge the tough stance from Seoul – Lutnick noted that the talks have been “often emotional” – but also recognize Seoul’s seriousness. In fact, despite the hardball rhetoric, Trump has kept channels open, even scheduling a summit with President Lee to resolve outstanding issues, indicating that the U.S. respects Korea’s earnest negotiating effort and sees a deal as achievable  .

Overview and Current Status of the US–Korea Tariff Negotiations

The year 2025 saw a sharp escalation in trade tensions between the U.S. and Korea over mutual tariffs. Upon returning to office, the Trump administration pursued aggressive tariff measures under the banner of reducing trade deficits and promoting “re-shoring” of manufacturing. In mid-2025, the U.S. announced plans to impose a blanket 25% tariff on imports from numerous trading partners – including Korea – effective August 1. This “tariff bomb” threat applied broadly (often referred to as a Section 232 national security tariff), raising the specter of a serious trade war between the allies .

Seoul’s response was to urgently seek a negotiated solution to avert a breakdown. The Korean government emphasized that “a trade war between allies must be avoided,” and as a negotiating counter, it assembled a large-scale investment package to persuade Washington to moderate its stance. After intense behind-the-scenes talks, a dramatic preliminary deal was reached on July 30, just two days before the tariffs were to hit. In that 1st-stage agreement, both sides agreed to lower the planned 25% reciprocal tariff to 15% . In addition, the U.S. committed to scale back the separate tariff it was considering on Korean automobiles under Trade Expansion Act Section 232 – reducing it from a threatened 25% down to 15% as well . This meant that the punitive tariff rate scheduled for Korean goods on August 1 dropped from 25% to 15% instead, contingent on further negotiations.

These concessions averted what could have been a full-blown 25% tariff “shock”, buying time and goodwill. However, even at 15%, the tariffs represented a significant rollback of the benefits Korea enjoyed under the KORUS Free Trade Agreement, which had provided virtually 0% duty on most bilateral trade. Observers noted that a 15% tariff, while better than 25%, still “nullifies the FTA effect” in many sectors. Nowhere was this more evident than in the auto industry: for years, Korean carmakers exported to the U.S. duty-free thanks to KORUS, but suddenly they face a 15% import tariff on their vehicles – a major setback in cost competitiveness.

To summarize the evolving deals, it’s helpful to compare the U.S. negotiations with Korea, Japan, and the EU, since Washington was simultaneously pressuring all three and using outcomes with one to pressure the others. The table below outlines the key negotiation outcomes for each:

Negotiating Party Final Tariff Measures Investment/Purchase Commitments Profit Sharing & Conditions Notable Points
Korea (talks ongoing) – Reciprocal tariffs reduced to 15% (from 25%) as of Aug 1 (provisional)– Auto tariff at 15% (up from FTA 0%; matching Japan/EU’s 15%)– Key items (semiconductors, pharmaceuticals, etc.) to receive no worse than other countries’ tariff treatment (MFN promise)  – Proposed $350 billion package of investments in the U.S.: • $150 bn “shipbuilding cooperation” fund • $200 bn “strategic industries” fund (semiconductors, nuclear, EV batteries, biotech, critical minerals – mix of investments and loans)– (Additionally, ~$100 bn in U.S. energy purchases over ~4 years ) – U.S. pushing Japan-like model: split fund profits 50/50 up to a point, then 90% of excess to U.S. . Korea calls this a “poison pill” and is resisting.– Snapback clause threat: U.S. warns if no deal or non-compliance, tariffs go back to 25%. – July 30: interim deal announced (15% tariff framework) but detailed terms not finalized.– Kim & Lutnick have met ~20 times; negotiations protracted compared to Japan/EU.– Korea’s slower timeline raising urgency to finalize, but also allowed it to refine terms (learning from Japan/EU deals).
Japan (agreement concluded) – Reciprocal tariffs locked at 15% (U.S.–Japan deal via executive order effective Sep 16)– Auto tariff cut from 27.5% to 15% (U.S. MFN 2.5% + extra 25% was 27.5%)– Other items (semiconductors, pharma, etc.) verbally promised MFN (most-favored-nation) treatment (not fully detailed publicly) – $550 billion U.S. investment fund commitment (entirely Japanese funding). Target sectors: semiconductors, pharmaceuticals, critical minerals, shipbuilding, energy, AI, quantum tech, etc.– (No specific energy purchase amount disclosed; Japan instead to invest in U.S. energy projects like LNG terminals) – Project selection rights given wholly to President Trump (U.S. discretion on how Japanese funds are used).– Profit sharing: after Japan recoups investment, 90% of further profits go to U.S. . (Japan accepted this in principle.)– U.S. added “fail-safe”: if Japan fails to meet commitments, tariffs can snap back (25%). – July 22: U.S.–Japan MOU signed, announcing deal (to be implemented Sep~).– Japan negotiated exit clauses: if terms unduly harm Japan or conflict with domestic law, Japan can void the deal . Also included preferences for Japanese companies in projects.– Tariff concessions for including U.S. content in Japanese projects (to encourage use of U.S. goods).
European Union (agreement concluded) – Reciprocal tariffs set at 15% (down from a threatened 30%) .– 15% covers almost all EU exports (including automobiles, machinery, pharmaceuticals, etc. – few exceptions). – $600 billion in new U.S. investments by EU entities (to be made by 2029).– $750 billion purchase of U.S. energy (LNG, etc.) over 3 years  (~$250 bn/year).– Additional U.S. arms purchases (exact amount not publicly specified; part of deal to address defense cost-sharing). – EU offered major concessions to offset trade imbalance: huge LNG purchases (energy security move for EU) and defense contracts, which U.S. sees as indirect “compensation.”– Accepted profit-sharing conditions similar to Japan’s (reportedly 90% excess profit to U.S., mirroring Japan’s terms, to secure deal).– Some exclusions: e.g. certain aircraft parts, specific meds, etc., were exempted from tariffs (declared MFN zero-tariff items) . – July 28: U.S.–EU summit (Trump & von der Leyen) announced deal. – EU originally pushed for 0% tariffs but took “the lesser evil” of 15% when Trump insisted no lower . (Quote: “15% is the floor.”)– Used massive LNG purchase to sweeten deal (also helps EU cut reliance on Russian gas), and agreed to quick timeline, putting pressure on Korea to follow suit.– EU deal seen as political trade-off to maintain unity with U.S., even at high cost (EU media: avoided worst-case, but sacrificed best-case).

Table: Key outcomes of U.S. tariff negotiations with Korea, Japan, and the EU. Korea’s deal is still being finalized and influenced by the frameworks already accepted by Japan and the EU, while Korea strives to secure more favorable terms in its version.

Auto Tariffs – Advent of the 15% Era and Its Ramifications

Among all sectors, the automotive industry has been front-and-center in the U.S.–Korea tariff clash. The United States, citing protection of its auto sector as a national security matter, prepared to levy a 25% tariff on imported automobiles – a move that would hit Korean carmakers extremely hard. In fact, between April and July 2025 the U.S. did impose a 25% tariff on foreign autos (under a trial or initial period), underscoring the seriousness of the threat. Prior to this dispute, Korean automakers had exported to the U.S. under zero tariffs (thanks to the FTA), so the sudden imposition of duties marked a huge shift. With the July 30 interim deal, the worst-case 25% “auto tariff” was averted and replaced by a 15% rate as of August 1, but even this 15% ushered in a new era of tariff costs for Korean cars in the U.S. market.

The U.S. is the single largest market for Korean automobiles, accounting for roughly half of Korea’s finished car exports (around 49%) and over a third of its auto parts exports (36.5% in 2024) . A tariff in this sector thus directly undermines Korean vehicles’ price competitiveness. For Hyundai Motor and Kia (the flagship Korean automakers), a 15% tariff forces a tough choice: either raise U.S. consumer prices (hurting sales) or absorb the cost in margins (hurting profits). Neither is desirable, and both companies fear losing market share if their cars become relatively more expensive than Japanese, European, or U.S. competitors. It’s worth noting that in the months of uncertainty (Q2 2025), Korean automakers already saw pressure on their U.S. sales when the 25% tariff briefly came into effect. Now at 15%, there’s relief it’s lower, but the shock is still significant – especially considering they enjoyed 0% duties for years prior.

Korea’s auto industry and government are responding with a multi-pronged strategy to navigate this “15% tariff era”:
• Expansion of U.S. production: Hyundai and Kia have been ramping up manufacturing in the United States for years (with major plants in Alabama and Georgia). The tariff provides an even greater incentive to localize production. Both companies are accelerating plans for new factories, including Hyundai’s dedicated electric vehicle (EV) plant in Georgia that started operations in late 2024 and additional EV production lines. By increasing the share of cars made in the U.S., they can sidestep import tariffs altogether. In effect, rather than exporting finished cars from Korea, they will ship more parts or build more components locally, mitigating the tariff impact. Industry projections suggest that if the tariff regime persists, Hyundai–Kia aim to have well over 50% of the vehicles they sell in the U.S. produced locally in North America in the coming years.
• Supply chain reconfiguration: Auto parts are also subject to tariffs, which complicates the production cost for both exports and even U.S.-assembled cars that rely on Korean components. This is pushing Korean parts suppliers to consider setting up operations in the U.S. or sourcing more components within the U.S. For example, critical components like engines and transmissions that were shipped from Korea may be increasingly sourced from or manufactured in the U.S. (or Mexico/Canada) to avoid tariffs. Korean parts makers are exploring establishing factories near the assembly plants of Hyundai and Kia in America. Essentially, the value chain is adjusting: what can’t avoid the tariff might be moved behind the U.S. tariff wall.
• Pricing and model mix adjustments: Automakers are likely to absorb a portion of the tariff cost instead of passing the full 15% to consumers, to stay price-competitive. This will squeeze profit margins. To cope, companies may shift their U.S. sales mix toward higher-margin models. For instance, they could prioritize exporting (or building) more SUVs, luxury trims, or EVs – vehicles where a higher price point and profit margin can better absorb a tariff hit. Lower-margin economy models might be deemphasized or built in Mexico (which enjoys its own trade terms) to keep costs down. We may also see fewer promotions/discounts as companies try to claw back some margin, though that risks sales volume. It’s a delicate balance: maintain market share without incurring heavy losses.
• Negotiating U.S. incentives: The Korean government and companies are simultaneously lobbying the U.S. for measures to offset the tariff burden. One angle is leveraging U.S. domestic laws like the Inflation Reduction Act (IRA), which provides tax credits for EVs assembled in North America and using North American-made batteries. Hyundai and Kia are racing to ensure their EVs qualify for these credits by building battery supply partnerships in the U.S. (e.g. joint ventures with SK On and LG Energy Solution) and meeting localization requirements. These $7,500 per vehicle tax credits can significantly counteract a 15% price increase, effectively blunting the tariff impact for EV models. Additionally, Korea will likely seek U.S. state-level incentives (tax breaks, grants) for any new factories or expansions in America as part of the negotiation goodwill – something the Commerce Department could facilitate. Such incentives won’t eliminate the tariff, but they can reduce overall operating costs.

Importantly, Korea had to ensure it wasn’t left in a worse position than its competitors. Japan’s auto industry had already secured the 15% deal (down from an even higher potential tariff of 27.5% on Japanese cars) by agreeing to large investments  . European automakers similarly got 15%. If Korea had failed to reach a deal and let the tariff snap back to 25%, Korean cars would suddenly be 10% more taxed than Japanese or European cars in the U.S. – a disastrous disadvantage. Fortunately, Korea’s negotiators succeeded in locking in the 15% cap (pending finalization), thereby keeping a level playing field with Japan and the EU in terms of tariff rates. Avoiding that worst-case (25% vs. others’ 15%) is a huge defensive victory for Korea’s auto sector; as one industry insider put it, “at least we’re not alone at a higher tariff – we can compete under the same conditions as Japan and Europe, which was the minimum goal.”

That said, 15% is still a far cry from 0%, so Korean automakers face a fundamentally less favorable U.S. market than they did under the FTA. This means that beyond short-term adjustments, they will need to double down on competitiveness. Hyundai Motor Group has been investing heavily in product quality, design, and technology (e.g. its EVs like the IONIQ and Kia EV series are earning strong reviews). These efforts must continue, along with strengthening brand image and after-sales service, to convince U.S. consumers that their vehicles are worth the price – even if a tariff adds to the cost. In essence, the industry must run faster just to maintain its position. Executives privately acknowledge that this tariff era is more about survival and mitigation than about thriving; however, they also see it as impetus to “pivot to becoming more American” in terms of production footprint and to innovate more rapidly. In the medium term, if Korea can weather the transition by localizing production and selling higher-value cars, it could maintain (or even eventually grow) its share in the U.S. market. But the coming years will be a test of resilience for the Korean auto sector, demanding strategic agility in response to the 15% tariff headwind.

Battery and Secondary Cell Industry – Negotiation Leverage and Supply Chain Reorganization

The EV battery and secondary cell industry has emerged as both a bargaining chip in the negotiations and a sector poised for significant realignment due to the new trade environment. As the world auto industry shifts toward electric vehicles, batteries are the new oil – a critical component that countries want to secure domestically. The U.S. has made it a strategic priority to build a robust domestic battery supply chain (as evidenced by the IRA’s battery sourcing rules and subsidies). Meanwhile, South Korea’s battery makers (LG Energy Solution, SK On, Samsung SDI) are among the global leaders, supplying many top automakers and investing heavily in North America.

Recognizing the leverage and mutual interests here, the battery sector became a key part of the Korean investment package offered to the U.S. In fact, out of the proposed $350 billion Korean investment, a large portion is earmarked for “strategic industries” that include batteries. The public details mention a $200 billion fund for strategic sectors like semiconductors, nuclear energy, and batteries, to support projects in the U.S. . This aligns perfectly with U.S. goals: it means Korean firms would invest in U.S.-based battery production, R&D, and supply chains, thereby helping the U.S. secure supply of EV batteries domestically. For Korean companies, it’s also an opportunity – by investing early and heavily, they can capture a dominant share of the rapidly growing U.S. EV battery market and benefit from American subsidies.

However, the battery arena also experienced an unexpected hiccup that became entangled with the negotiations. In early September, U.S. immigration authorities (ICE) conducted a surprise raid at a construction site for a new Hyundai–LG Energy Solution joint battery plant in Georgia. They detained hundreds of Korean workers (some on allegedly improper visas), causing a diplomatic incident. Minister Kim made this the first issue he raised when he met Secretary Lutnick in New York soon after . Kim pressed that this kind of overzealous action was unacceptable, especially toward an ally’s major investment. The U.S. side, caught off guard, moved quickly to defuse the situation: Lutnick expressed embarrassment and vowed to “fix” the issue immediately, and even a U.S. State Department official conveyed regret . The U.S. essentially acknowledged that crackdowns of this nature should not hinder allied strategic projects. The detained workers were soon released, and both governments set to work on preventing such incidents (through clearer visa arrangements for Korean engineers, perhaps). This incident underscored how integral the battery sector is to the “allied cooperation” narrative – both sides know that successful battery ventures are a cornerstone of the broader deal, and thus they treated the ICE raid as an aberration to be urgently corrected.

Looking forward, the battery/secondary cell industry is expected to see several impacts and strategic responses as a result of the tariff deal and investment pledges:
• Accelerated U.S. production and investment: All three major Korean battery firms are in the midst of building gigafactories in the U.S. – often joint ventures with automakers (LGES with GM and Honda, SK On with Ford, Samsung SDI with Stellantis, and as noted LGES also with Hyundai). With a tariff agreement reducing uncertainty, these companies are likely to expedite those investments and announce new ones. Indeed, the $200 billion strategic fund, which covers battery projects, will inject capital into expanding production capacity on U.S. soil . This will entrench Korean firms in the U.S. EV supply chain. In practical terms, it means thousands of new jobs in states like Michigan, Tennessee, Georgia, Ohio, etc., and a deepening of Korea’s stake in the U.S. economy. It also positions Korean companies to dominate EV battery supply for the next generation of American-made electric cars, since they are partnering with essentially every major U.S. and Japanese automaker with U.S. operations. Market-wise, Korean battery makers could end up controlling a very large share of North America’s EV battery production within a few years – a strategic win born out of the negotiation pressures.
• Technology and talent exchange: With new plants and facilities in the U.S., there’s a significant flow of technology and skilled personnel from Korea to America. Hundreds of Korean battery experts – engineers, technicians, managers – are temporarily (or permanently) moving to the U.S. to set up and run these plants. The Georgia raid incident highlighted the need for smoother arrangements for these workers. We can expect both governments to work on special visa programs or exemptions for critical industrial personnel. For example, creating a category for workers involved in strategic investment projects to legally stay and work in the U.S. without bureaucratic hurdles. The resolution of the Georgia issue and Lutnick’s comments suggest this is on the agenda . Over time, as Korean engineers train American staff (a point Lutnick noted, saying Trump would likely arrange deals for foreign workers to train Americans before returning home ), there will be a diffusion of Korean battery expertise into the U.S. workforce. This knowledge transfer means U.S. battery production will benefit from Korea’s advanced technology, and jointly, the two countries can drive innovation (for instance in next-gen battery chemistry, solid-state batteries, etc.). It’s essentially forming a Korea–USA battery technology alliance.
• Maximizing benefits from U.S. policies (IRA): The Inflation Reduction Act’s EV and battery provisions create strong financial incentives to localize battery supply chains in North America. Korean firms had already adjusted strategies to meet these conditions – and the tariff deal reinforces that approach. By building batteries in the U.S., Korean companies ensure that EVs assembled by their partner automakers qualify for the full U.S. EV tax credits (which require a percentage of battery components and minerals to be from the U.S. or FTA countries). Moreover, there are production tax credits in the IRA that effectively subsidize each kWh of battery made in the U.S. The Korean investments will capitalize on these. Some experts even suggest the U.S. might fine-tune IRA rules favorably for Korea as part of the broader negotiation goodwill – for example, counting Korean-origin critical minerals as equivalent to U.S. ones (since the two countries signed a mineral security partnership). While not guaranteed, such friendly interpretations would help Korean battery supply chains meet IRA thresholds more easily, thereby ensuring their EV customers (like Hyundai’s EVs) get the consumer tax credit. This is a subtle but very meaningful way the tariff negotiation might yield side benefits in industrial policy.
• Raw materials and upstream supply chain cooperation: A battery is only as secure as its supply of raw materials like lithium, nickel, cobalt, manganese, and graphite. Both the U.S. and Korea are eager to reduce reliance on China for these inputs. As part of the strategic fund and economic security discussions, expect increased collaboration on sourcing and processing critical minerals. Korea has been active in securing mineral deals in countries like Australia, Canada, and Chile; the U.S. might join or support these efforts. Additionally, Korean materials companies (for cathodes, anodes, separators, etc.) could invest in the U.S. to create a localized battery materials ecosystem. This would mirror what’s happening with semiconductors – building a full supply chain on U.S. soil. In negotiation talks, Korea has highlighted that its battery sector can bolster U.S. energy security, and the U.S. has responded by treating Korean suppliers more as “domestic” under certain provisions. One concrete outcome to watch: whether the U.S. grants an IRA waiver or flexible interpretation for Korean-sourced battery materials (something Korean officials have lobbied for). If so, it effectively integrates Korean and U.S. supply chains more tightly, reflecting the spirit of an economic alliance.

In short, the battery industry stands at a crossroads of risk and opportunity in these negotiations. In the short term, it was a potential victim of tariffs (batteries and EV components could have been hit with duties, raising costs), but Korea’s negotiators managed to include language that promises equal treatment for these key sectors . In the long term, the huge investments pledged are turning the battery sector into one of the cornerstones of US–Korea cooperation. Kim Jeong-gwan has portrayed the $350 billion investment package not as a one-sided giveaway but as a plan that “also helps our companies’ expansion into the U.S.” . The battery sector is a prime example of this – Korean firms are spending billions in the U.S., but in return they’re gaining market access, subsidies, and influence. If all goes well, a decade from now the U.S. could be a battery production hub for which Korean technology is largely responsible, and both countries will reap the benefits of a secure, advanced battery supply chain. What began as a point of negotiation contention is evolving into arguably a win-win strategic partnership in EV batteries.

Semiconductor Sector – Strategic Industry Cooperation and Potential Tariff Risks

Semiconductors are another strategic sector that has featured prominently – albeit sometimes implicitly – in the tariff negotiations. As foundational technologies for the modern economy and national security (powering everything from cars to AI), chips have a special status. Both the U.S. and Korea consider semiconductors a vital industry: the U.S. wants to rejuvenate its domestic chip production (via the CHIPS Act’s tens of billions in subsidies), and Korea is home to two of the world’s semiconductor giants (Samsung Electronics and SK Hynix) and has a national interest in protecting and advancing its semiconductor sector. This mutual importance made semiconductors a delicate topic in negotiations – a mix of cooperation and guardedness.

Early in the negotiation saga, the Trump administration ratcheted up pressure by hinting at tariffs on semiconductors (and other high-value exports like pharmaceuticals). In fact, President Trump reportedly suggested that “for items like chips and pharma – which have high profit margins – tariffs even higher than 25% could be imposed”, implying they could be targets if Korea didn’t agree to terms . This kind of statement sent shockwaves through the Korean tech industry, as the U.S. is a key market and, more importantly, Korean companies supply crucial chips to American tech firms. A punitive tariff on semiconductors could disrupt global tech supply chains and harm U.S. companies (like Apple, which sources memory chips from SK Hynix, or auto companies relying on Korean chips). It was seen by many as a bluff or pressure tactic, but Korea had to take it seriously.

During the frantic negotiations in July, Korea secured a critical assurance regarding semiconductors. The interim agreement announced on July 30 included phrasing to the effect that if the U.S. imposes Section 232 national-security tariffs on items such as semiconductors or pharmaceuticals in the future, Korea will receive treatment no less favorable than any other country . In simpler terms, the U.S. promised that Korea won’t be singled out for harsher tariffs on these critical items and will get at least the best terms given to others. This was essentially a most-favored-nation (MFN) guarantee for chips and drugs. Given that in the Japan deal the U.S. had already (informally) promised not to disadvantage Japan’s semiconductor sector, Korea obtaining the same promise was essential. This commitment greatly reduces the risk of sudden new U.S. tariffs hitting Korean semiconductors down the line. It means, for example, if the U.S. were to set a 10% tariff on global semiconductor imports, Korea would also be at 10% (not 15% or 25%). Or if the U.S. exempts an ally, Korea would be exempt too. Essentially, it neutralized the threat that Korean chips would face a worse fate than, say, Japanese or European chips.

On the investment side, Korean semiconductor companies are a major part of the $350 billion package. The strategic industries fund (the $200 bn portion) lists semiconductors as a top priority , and we already see tangible moves: Samsung is currently constructing a $17 billion semiconductor fab in Taylor, Texas – one of the largest foreign direct investments in the U.S. high-tech sector . They are also considering building additional fabs (with speculation of possibly investing tens of billions more in Texas over the coming decade). SK Hynix, on its end, announced plans for a state-of-the-art chip packaging and testing facility in the U.S. and is expanding its research presence in Silicon Valley. These investments dovetail with U.S. strategic goals (securing supply of advanced logic chips, diversifying sources of memory chips, etc.). In negotiations, U.S. officials have pushed for even greater Korean participation in its “Chip 4” alliance (a semiconductor coalition of U.S., Korea, Japan, Taiwan aimed at reducing dependence on China). By putting money on the table (via these investments), Korea strengthens its case to be treated as a top-tier partner in semiconductors. Notably, Samsung’s foundry plant in Texas is expected to produce cutting-edge chips that could even serve sensitive applications (possibly military or AI uses), something that aligns with U.S. interests in having secure chip production onshore.

Considering these developments, here are key implications and expectations for the semiconductor sector post-negotiation:
• Tariff risk mitigation: Thanks to the MFN clause mentioned, the risk of abrupt new U.S. tariffs on Korean semiconductors is significantly mitigated. Korea can operate with more confidence that its chips will not be unfairly taxed compared to Japanese or European chips. In the Japan–U.S. deal, it was noted that Japan got a promise of “preferential treatment” for chips and pharma (meaning any future tariff would spare them or be minimal). Korea now effectively has the same promise . This was crucial for companies like Samsung and SK Hynix – it means they can continue exporting memory chips and other semis to U.S. customers (or their own U.S. factories) without fear of sudden cost spikes. It also means the status quo of relatively free flow of semiconductors (aside from existing tech export controls involving China) remains for U.S.–Korea trade, preserving the stability Korean tech firms need.
• Investment returns and profit-sharing adjustments: One contentious point still under negotiation is how the returns on Korean investments will be handled. The U.S. initially proposed, as it did with Japan, a framework where after a certain baseline return, 90% of profits from jointly funded projects go to the U.S. . For Korean semiconductor fabs in the U.S., this was a red flag – essentially it could mean if Samsung’s Texas fab became highly profitable, the U.S. government (or related entity) might claim an outsize share of those profits. Kim called such terms “indigestible” and has been fighting to modify them. We expect that in the final deal, Korea will secure more favorable profit-sharing or cost-sharing terms for its chip investments. This could be done by, for instance, treating the investments as commercial ventures with standard tax incentives rather than special “fund” projects subject to profit claw-backs. U.S. Commerce officials have hinted at flexibility here, especially since forcing too punitive terms could discourage the very investments they want. There’s also talk of the U.S. possibly co-investing or taking equity stakes in large projects (Lutnick even mused about the U.S. government investing in chip companies to share risk/reward ). If that happens, it would represent a different model: rather than Korea handing over profits, the U.S. would be an investor sharing profits but also sharing costs upfront. In any case, the outcome will likely ensure that Korean firms get to retain a reasonable return on their U.S. ventures, satisfying Seoul’s demand that “the structure isn’t one where the U.S. takes everything” . From a Korean perspective, this is about protecting their massive investments – e.g., if Samsung is pouring $17B+ into a fab, they need assurance that the financial gains from that fab will primarily accrue to Samsung (and its shareholders, many of whom are Korean pension funds, etc.), not be siphoned away.
• Tech alliance and setting standards: Beyond tangible investments, the negotiations have spurred discussions about future technology collaboration. The U.S. sees Korea as a critical ally in developing next-generation semiconductors (like 2nm and below process nodes, AI accelerators, quantum computing chips, etc.). In the U.S.–Japan MOU, there was explicit mention of joint projects in AI and quantum technology. We can expect the US–Korea agreement to include similar cooperative initiatives. This might involve co-funding R&D centers, sharing research findings, or jointly developing tech standards. Such cooperation benefits Korea by giving it access to U.S. research ecosystems and vice versa. An example might be a joint task force on setting industry standards for AI chips – ensuring that Korean and U.S. companies’ technologies align and perhaps become global standards (preempting Chinese standards, for instance). Another area is workforce development – e.g., scholarship programs or exchange programs for semiconductor talent between the countries. By deepening tech ties, the two countries not only strengthen their industries but also create a united front in the face of rising Chinese semiconductor capabilities. However, an important caveat: the U.S. will likely ask Korea to coordinate on export controls to China as part of this tech alliance. Already, the U.S. has export restrictions on advanced chip tech to China, and it has pressured ASML (Dutch) and others to comply. Samsung and SK Hynix have large operations in China (memory chip fabs), and the U.S. has given them temporary waivers to continue those operations. In a strengthened alliance context, the U.S. might push Korea to limit expansion or technology upgrades in China, effectively aligning with U.S. efforts to curtail China’s cutting-edge chip production. Korea will tread carefully here – complying to an extent but also needing to protect its business interests. The government is likely negotiating assurances that if Korean firms incur losses from stricter controls on China, the U.S. will help offset them (perhaps through subsidies or allowing extended waivers). It’s a complex balance of fostering a “Chip Alliance” while managing the China factor.
• Diversifying semiconductor supply chains (“friend-shoring”): A subtle outcome of the U.S. strategy is that it encourages allies to produce more chips on U.S. soil or in allied countries rather than in places like China. We’ve touched on Korea’s investments in the U.S., but there could also be moves to diversify chip supply in other friendly locations. For instance, there’s been talk of Samsung potentially expanding in Japan (in partnership with Japanese firms) as part of a trilateral cooperation, or in India or Southeast Asia. The negotiations have likely included U.S. requests for Korea to consider such “friend-shoring.” While not public, one can imagine side discussions like: “If Korea reduces its semiconductor output in China and increases it in the U.S. or elsewhere, the U.S. will support those efforts.” Indeed, the U.S. has included Japan and potentially Europe in some chip initiatives, and Korea will want not to be left out. The result might be a more geographically distributed production network for Korean companies: continuing high-end production in Korea, some in the U.S. (for logic/foundry), some packaging in the U.S., some in Southeast Asia (where labor is cheaper for assembly), etc. This makes the supply chain more resilient to geopolitical risks. The cost, however, is duplication and perhaps inefficiency compared to centralized mega-fabs in one country. The Korean government is likely discussing with its firms how to balance this. It’s relevant to note that Korea is also investing heavily at home (Samsung is building a huge chip cluster near Yongin, and SK Hynix expanding in Yongin and elsewhere) – they won’t move everything out. But by strategically placing some production abroad, they build goodwill and insurance. For example, having a foothold in the U.S. could insulate Samsung from some U.S. trade actions, because it becomes a job creator in America – a factor the negotiations explicitly aimed to achieve.

In summary, the semiconductor sector’s role in the negotiations exemplifies the theme of marrying short-term trade issues with long-term strategic alignment. Minister Kim emphasized that Korea is not just looking at immediate gains or losses but “considering long-term industrial linkages” . With semiconductors, Korea appears to be playing the long game: it yielded some immediate concessions (e.g. large investments, implicit agreement to tighter export controls to certain countries) in exchange for securing its place in the U.S.-led tech order. The philosophy is that it’s better to be an insider in the new semiconductor ecosystem than an outsider subject to tariffs or restrictions. By negotiating calmly and focusing on core interests – ensuring Korean firms aren’t penalized unfairly and can profit from their investments – Korea managed to guard the crown jewels of its tech industry. The result is likely a stronger US–Korea partnership in semiconductors, which could pay dividends in both innovation and supply security. And crucially for Korea’s economy, its semiconductor champions now have clearer runway to keep doing business globally without the overhang of U.S. tariff threats, allowing them to invest and plan with more confidence.

Energy and Nuclear Industry – Alliance-Level Cooperation and Competitive Undercurrents

The energy sector – encompassing both traditional energy (oil, gas, LNG) and nuclear power – plays a significant role in the tariff negotiations, reflecting issues that go beyond mere trade and into geopolitics and alliance strategy. The U.S. has leveraged its position as an energy producer and its influence in global nuclear technology to extract concessions and shape agreements, while Korea has both acquiesced in some areas and asserted itself in others to protect its interests.

One key element is the U.S. objective of expanding exports of American energy (fossil fuels and others) to its allies to help rebalance trade. In the context of these negotiations, the EU’s deal is illustrative: to avoid a catastrophic 30% tariff, the EU agreed to purchase a whopping $750 billion of U.S. energy products (mainly LNG) over three years , roughly $250 billion per year. This was in addition to investing $600 billion in the U.S. The EU had its own motive – reducing reliance on Russian gas – so this energy purchase was seen as mutually beneficial albeit extremely costly (some analysts called the figure unrealistically high , essentially a political gesture). For the EU, accepting 15% tariffs was a “lesser evil” made palatable by the fact that buying U.S. LNG also served their strategic energy needs .

Korea, lacking the EU’s energy dependence on Russia, was initially more hesitant to include large energy purchases in a trade deal. However, under U.S. pressure, Korea did agree to a sizable energy import commitment – specifically, to import $100 billion of U.S. energy (likely LNG and possibly crude oil or refined products) over roughly the next 3 to 4 years . This was confirmed in government briefings: “Korea will import $100 billion of U.S. LNG and other energy in the next 3½ years.” . While far smaller than the EU’s pledge, this is still a major uptick in U.S. energy purchases for Korea (equating to about $25–30 billion per year, which is on the order of one-third of Korea’s total annual energy import bill). It means U.S. suppliers (from LNG producers in Texas/Louisiana to perhaps coal or oil exporters) can count on a big, guaranteed Korean market in the short term. Economically, this may raise Korea’s energy import costs (U.S. LNG can be pricier than other sources on a long-term basis), but it achieves U.S. aims of balancing trade and deepening energy ties. Politically, it sends a message of alliance solidarity – Korea is effectively saying, “We’re willing to buy more from our ally even if it’s not the absolute cheapest option, because we value the partnership.”

Turning to nuclear power, this is an arena of both cooperation and competition between the U.S. and Korea, and the negotiations have touched on both aspects:
• Korea is a leading civil nuclear exporter (with its APR1400 reactors) and has ambitions to win reactor projects abroad (e.g. in Eastern Europe, Middle East). The Yoon administration made nuclear export revival a priority. However, a major complication arose with the Poland nuclear project bids: Korea Hydro & Nuclear Power (KHNP) was vying to build reactors in Poland, but Westinghouse, the U.S. nuclear firm, filed a lawsuit claiming Korean reactors use U.S. intellectual property and therefore Korea cannot export them without U.S. permission . This legal move was widely seen as the U.S. attempting to block Korea from taking a nuclear contract that Westinghouse/American interests wanted. It introduced tension in what should ideally be an area of alliance cooperation. Kim Jeong-gwan alluded to this when he said “Trump’s America is not the same America of 10–20 years ago… they at times say ‘if you don’t do what we want, you’re not our ally’” , indicating frustration that the U.S. was not always acting “rationally” or fairly (from Korea’s perspective) in sectors like nuclear. Essentially, U.S. industrial self-interest collided with Korean commercial interests.
• Despite such friction, there is strong logic for U.S.–Korea cooperation in nuclear energy. Both countries have advanced nuclear tech – the U.S. (via Westinghouse, GE, etc.) and Korea (via KHNP) could together be very competitive in global markets. Recognizing this, the negotiations and related dialogues have started to include joint nuclear cooperation initiatives. For example, Japan’s investment package included nuclear projects (likely small modular reactors or joint ventures) and Korea’s $200 billion strategic fund is also set to cover nuclear power investments . This could manifest as joint bids in third countries (instead of undercutting each other). There are rumors that for Poland or other upcoming projects, the U.S. and Korea might form a consortium – perhaps Westinghouse providing fuel and licensing, and KHNP providing reactor construction and operational expertise – splitting roles to make a joint offer. Another area is Small Modular Reactors (SMRs): both nations are working on SMR designs (the U.S. has several startups like NuScale, and Korea is developing its SMART reactor). Kim indicated that “SMR development is inevitable and must proceed, even if we go through public debate”, signaling Korea’s commitment to next-gen nuclear . A U.S.–Korea partnership on SMRs could pool R&D and help set standards (especially to counter emerging competitors like Russia’s and China’s SMR models). By cooperating, they can ensure Western (and Korean) designs capture a large share of the future market.
• A significant part of the negotiation dynamic has been the geopolitical value of Korea’s nuclear industry to the alliance. For instance, the U.S. likely sees benefit in Korea building reactors in allied or partner countries as opposed to those countries buying from Russia or China. UAE’s Barakah project (built by Korea) is a case often cited as a successful model of allied collaboration – Korea did the construction, but it uses U.S. fuel and components, and it advanced U.S. non-proliferation goals by providing an alternative to Russian or Chinese reactors in the Middle East. In the negotiations, Korea presumably reminded the U.S. of these shared successes and argued that stifling Korea’s nuclear exports (like via Westinghouse’s actions) ultimately only helps Russia/China. It seems this message landed: there have been behind-the-scenes discussions to resolve the Westinghouse dispute, possibly by diplomatic agreement or by structuring future bids as joint ventures that satisfy Westinghouse’s claims. If the tariff deal concludes amicably, one might see Westinghouse dropping or settling its lawsuit with KHNP as a goodwill outcome – effectively removing a thorn in the alliance.

Considering the broader impact on energy and nuclear industries, we can outline likely consequences and strategies:
• Korean nuclear export competitiveness: A successful trade agreement could indirectly bolster Korea’s position in nuclear export markets. With the U.S. now more of a partner (or at least not an adversary) on nuclear deals, Korea could leverage that. For example, the U.S. could refrain from interfering in Korea’s deals or even endorse them. A hypothetical: if Korea pursues a reactor project in Saudi Arabia or Czech Republic, the U.S. might quietly support Korea (especially if the alternative is a Russian or Chinese bid), whereas before it might have pushed Westinghouse’s case. Additionally, if investment funds from the $350 bn package are used to finance nuclear projects abroad with U.S. blessing, it could make Korean bids more attractive (financing is key in nuclear deals). Essentially, Korea might gain financing muscle and political backing from the U.S., improving its odds in competitive tenders. On the flip side, if negotiations had failed, the U.S. was poised to be much more hostile – threatening not just tariffs but possibly blocking Korean reactors in various ways. That seems off the table now with the alliance-centric approach.
• Korean participation in U.S. nuclear opportunities: The U.S. itself is looking at building new nuclear plants (including advanced reactors and SMRs) to meet climate goals and replace retiring reactors. The door appears open for Korean companies to take part in U.S. nuclear projects. During Japan’s negotiations, one concession was giving Japan some role or at least an inside track in U.S. infrastructure projects (like LNG pipelines). For Korea, it could be nuclear projects. For instance, if the U.S. decides to build new SMRs at federal sites or in states open to nuclear, KHNP could partner with an American firm to supply engineering and construction. Korea’s demonstrated ability to build on time and on budget (Barakah is a case in point) is attractive. We might see initiatives like a US–ROK civil nuclear working group that, aside from exports, also plans for U.S. deployments of Korean reactor tech or components. If realized, that means Korean firms would gain a foothold in the U.S. energy market, and the U.S. would get quality reactors delivered efficiently. It would be a win-win: jobs and energy security for the U.S., business and prestige for Korea.
• Energy import burden vs. alliance benefits: Korea’s commitment to buy $100 billion in U.S. energy does come with a cost. U.S. LNG has to be shipped across the Pacific, potentially making it more expensive than sourcing from, say, Qatar or Australia. Over a few years, this could translate to higher electricity and gas costs in Korea, or require government subsidies to state gas companies. However, the Korean government likely deems this a manageable cost for strengthening the alliance. To mitigate the financial impact, Seoul has parallelly been seeking financial cooperation – notably, a permanent U.S.–Korea currency swap arrangement to bolster financial stability . While a swap line isn’t a direct compensation for energy costs, it provides liquidity and can help stabilize the Korean won (important when you suddenly have to spend more on dollar-denominated LNG). Interestingly, when questioned about the ballooning trade deficit due to energy imports, officials have suggested that the U.S. could in return be more accommodating on financial measures (and indeed, talks of a swap have been reported ). If the swap or other measures come through, it would demonstrate how the alliance give-and-take works: Korea buys more LNG (helping the U.S. economy and energy goals), and the U.S. ensures Korea doesn’t suffer a financial squeeze as a result. Additionally, Korea can view the $100 billion LNG purchase as partially an investment in energy security: diversifying away from Middle Eastern oil or potentially unstable suppliers. U.S. LNG is reliable, and buying it ingratiates Korea with U.S. lawmakers from energy-producing states, which has diplomatic value.
• Broader clean energy and climate collaboration: In the spirit of a “comprehensive alliance”, the negotiations have spurred conversations on clean energy cooperation. For example, hydrogen economy development, carbon capture utilization and storage (CCUS), and renewable energy projects. The U.S. might encourage Korean firms to invest in American clean energy initiatives (like green hydrogen production in Texas or offshore wind in the Atlantic). Conversely, the U.S. may support Korea’s goals in areas like hydrogen vehicles or smart grids by sharing tech or including Korea in pilot programs. While these topics are not directly tariff-related, they often come up in side agreements or joint statements around the main deal. We might see something like a US–ROK Clean Energy Partnership MOU signed alongside the tariff deal, pledging joint R&D or setting up demonstration projects. One concrete example: Korea is interested in hydrogen-fueled power and has fuel cell tech; the U.S. is ramping up hydrogen infrastructure through the Bipartisan Infrastructure Law. Combining efforts, they could launch a joint hydrogen supply chain project – perhaps shipping clean hydrogen or ammonia from the U.S. to Korea. These collaborative efforts serve multiple purposes: they soften the narrative that the negotiations were purely about tariffs (showcasing positive cooperation), they open new business opportunities, and they address global issues like climate change together.

In essence, energy and nuclear issues in the negotiation reflect the broader transformation of the US–Korea relationship from a traditional trade partnership to a more strategic economic alliance. It’s not just “how many cars at what tariff” but “how can we ensure our mutual security and prosperity through energy and technology collaboration.” Kim Jeong-gwan alluded to this when he said he pondered “what kind of Republic of Korea we need for the next generation – a peaceful and secure one, where our companies roam the world freely” . Energy security (through diversified sources and nuclear power) and maintaining strong alliances are key to that vision. By agreeing to import U.S. energy and collaborate on nuclear tech, Korea is investing in a stable alliance framework. By accommodating Korea’s nuclear ambitions (to an extent) and integrating energy ties, the U.S. is reinforcing Korea’s role as a core ally. Of course, a dose of realpolitik remains – the U.S. is also securing big business for its energy sector, and Korea is trying to get an edge for its companies – but at the higher level, these moves contribute to an “energy and technology alliance” that complements the military alliance. Assuming the deals are faithfully implemented, one could foresee a future where U.S. LNG terminals count on Korean buyers, Korean reactors operate in multiple allied countries with U.S. partnership, and even possibly an SMR built on Korean soil with U.S. collaboration for safe, clean energy – all outcomes that strengthen the alliance and benefit both sides.

Steel, Petrochemicals, and Other Traditional Manufacturing – Buffers and Industry Responses

While high-tech and strategic industries drew much attention, the bread-and-butter manufacturing sectors – like steel, petrochemicals, machinery, and consumer goods – also fall under the shadow of the new tariff regime. These sectors often employ large workforces and form the backbone of Korea’s export economy, so the government has been keen to address their concerns in the negotiations and prepare “shock absorbers” to help them adjust.

Under the provisional deal, most industrial goods traded between the U.S. and Korea are now subject to a 15% tariff (unless explicitly exempted). This includes steel and aluminum products, which in Korea’s case had been under a special regime since 2018 due to Trump’s Section 232 tariffs. Back then, Korea negotiated a quota arrangement (export up to ~70% of historical volume without tariff). Now, quotas are gone but a flat 15% tariff on steel is in place  . The advantage is Korean steelmakers can sell more than the old quota volume if there’s demand (no quantitative cap), but the disadvantage is every ton faces 15% duty, making it more expensive for U.S. buyers.

Korean steel companies are adapting strategy accordingly:
• They will prioritize higher-value steel exports – such as automotive-grade steel sheets, specialty alloys, high-strength plate for energy sector, etc. – which U.S. customers might be willing to pay a premium for (even with a tariff) because of limited local alternatives or superior quality. Lower-margin, commodity-grade steel (basic rebar, generic hot-rolled coil) will be less competitive with a 15% cost hike, so Korean mills might redirect those to other markets or consider processing them in a third country to circumvent tariffs.
• Korean steelmakers also noted that the playing field in the U.S. is now equalized: Japanese steel, which previously faced only the baseline 2.5% tariff (Japan didn’t have an FTA but had some 232 quota flexibility), now also faces 15%. So all foreign steel is pricier in the U.S. – meaning U.S. steel prices will likely rise, and American steel producers face less import pressure. In a sense, Korean firms aren’t singled out; they just have to compete on quality and service, not on tariff disparity. An analyst described it as “the U.S. market price floor for steel has been raised for everyone, so Korean steel can still compete as long as it stays in the higher-tier segment.”
• Another interesting wrinkle: as part of the negotiated packages, Japan secured a condition that projects it finances would preferentially use Japanese products. For example, Japan’s $550 bn included investment in an Alaska LNG pipeline, which presumably will use a lot of steel – likely Japanese-made steel by agreement  . Similarly, Korea’s $150 bn shipbuilding fund might involve investing in U.S. shipyards or maritime projects, and Korea can ensure those projects use Korean-made steel (ship plate, etc.). In doing so, Korea indirectly boosts its steel exports: the steel goes to a Korean-funded project in the U.S. and thus is somewhat sheltered because it’s part of the investment arrangement. This kind of “tied demand” can act as a buffer for Korean steel companies. Essentially, Korea is saying: “We’ll put money into your infrastructure, but we’ll supply the materials for it.” It’s a form of industrial diplomacy that ensures Korean traditional industries get a slice of the pie from the big investment outflows.

Turning to petrochemicals, the situation is challenging. The U.S. shale revolution has given American chemical producers ultra-cheap feedstock (natural gas), resulting in very low production costs for things like ethylene, polyethylene, etc. Korean petrochemical firms, which import most of their feedstock, were already at a cost disadvantage. A 15% tariff on Korean chemical exports to the U.S. thus hits an industry that’s already under competitive pressure. The likely responses and outcomes are:
• Local production in the U.S.: Companies like Lotte Chemical have preemptively invested in U.S. production. Lotte’s giant ethane cracker in Louisiana is one example – it uses cheap U.S. ethane to make ethylene. With tariffs in place, such investments become even more sensible, as the output can be sold within the U.S. without tariffs. We may see additional investments in downstream facilities (e.g. making plastics or specialty chemicals in the U.S.) by Korean firms to maintain access to the market. The trade deal’s stable framework might encourage these decisions, since investors know what the tariff environment is.
• Focus on high-margin and specialty chemicals: Basic commodity polymers might lose out, but Korea can still export certain specialty chemicals or materials where it has an edge and volumes are smaller. These could include advanced plastics for electronics, carbon fibers, OLED materials, etc. Often these have few global suppliers, so U.S. buyers might accept the 15% tariff as a pass-through cost given the lack of alternatives. Korean firms will double down on R&D for such products to keep them differentiated. Essentially, move up the value chain so that demand is less price-sensitive.
• Cost absorption and market diversification: Similar to autos, chemical firms might have to eat some of the tariff cost to retain U.S. clients, especially for semi-commodity products. This will squeeze margins. They will try to offset this by expanding sales in other regions not subject to tariffs – e.g. Southeast Asia, India, Africa – markets where demand is growing and where they compete mostly with other international players on equal footing. The Korean government is likely to boost export promotion efforts in these regions (trade missions, new FTAs like the RCEP, etc.) to help redirect some capacity away from the tariff-hampered U.S. market.

For machinery, electronics components, and consumer goods (like appliances, home electronics, etc.), similar logic applies: they enjoyed duty-free under the FTA, now face 15%. Each subsector’s ability to cope will vary:
• Heavy machinery (e.g. factory equipment): Often custom orders, so Korean firms may negotiate case-by-case with U.S. buyers on splitting the tariff cost. Some might establish assembly in the U.S. if volume justifies (like some equipment manufacturers may open a small U.S. assembly plant to finish products locally and avoid the import tariff on the whole unit).
• Electronics components: Many were already produced in Asia and flown to U.S. manufacturers. A 15% tariff might push American companies to source a bit more from Mexico or domestically if possible. Korean component makers might counter by setting up distribution or final testing in the U.S. to add some value locally (sometimes, minimal transformation in a NAFTA country can qualify a product for lower tariffs). They will also lean on the fact that for many high-tech components (like certain display panels or memory chips), Korea (or its companies) dominate supply, so U.S. buyers will simply have to pay the tariff if they want the part. In those cases, the market power is with the seller.
• Consumer goods (e.g. electronics, appliances): Firms like Samsung Electronics and LG have significant U.S. presence (Samsung has a washing machine factory in South Carolina, LG has one in Tennessee, etc., established after earlier tariff disputes under Trump). Those moves now pay off, as locally made units aren’t tariffed. For products still imported (e.g. TVs, some refrigerators), the companies might adjust pricing or promote higher-end models to maintain profitability. They could also consider shifting more production to Mexico (using the USMCA trade pact) for tariff-free entry to the U.S.

The Korean government has prepared or is contemplating several supportive measures to cushion traditional industries:
• Export market diversification assistance: Through its trade promotion agencies (KOTRA, etc.), Korea is intensifying support for companies to enter new markets. This includes organizing trade fairs, subsidizing marketing, and using diplomatic channels to reduce barriers in other countries so that Korean firms have alternatives to the U.S. For example, if a mid-sized machinery firm is losing sales in the U.S. due to cost, KOTRA might help it secure deals in the Middle East where Korea recently inked economic agreements.
• Domestic subsidies or tax breaks: There have been discussions that if U.S. tariffs cause significant injury to a sector, the government might consider tariff rebates or subsidies to those firms. Kim mentioned that during Trump’s first term, an idea was floated to reimburse companies for tariff costs . While that wasn’t implemented (and could raise WTO legality issues), it indicates the government’s willingness to step in financially if needed. More feasible are measures like tax credits for affected exporters, energy cost rebates, or increased support from state-run banks to affected sectors (low-interest loans to improve facilities, thus reducing costs). Already, policy banks were directed to extend financing to SMEs hit by trade issues.
• Currency and macroeconomic policy: A softer Korean Won makes Korean exports cheaper, partially offseting tariff impacts. The Bank of Korea doesn’t explicitly manipulate the currency, but it can allow depreciation if market forces push that way. Interestingly, as trade uncertainties grew in 2025, the won did slide somewhat, which actually helped exporters deal with tariff costs. Additionally, the government is likely coordinating with the U.S. to avoid accusations of currency manipulation by being transparent. They may rely more on fiscal tools like the aforementioned subsidies rather than overt exchange rate moves. Meanwhile, securing a permanent currency swap with the U.S. Fed (even if not directly used for trade, it boosts investor confidence in Korea’s financial stability) is another macro goal that indirectly helps – by preventing capital flight, it keeps the won at a competitive level naturally .
• Leveraging U.S. industry allies: Korean industries are quietly coordinating with their U.S. customers and partners to push back on tariffs. For instance, American automakers who buy Korean steel parts, or chemical companies that feed Korean petrochemicals into their supply chain, might lobby the U.S. government that the tariffs are counterproductive. We saw a hint of this: U.S. steel-using industries often complain high tariffs raise their costs. By aligning with these groups (through trade associations or joint letters to officials), Korean companies hope to either get exemptions for certain products or at least discourage any future increases. This was likely part of Korea’s negotiation message: that some U.S. industries also wanted relief. If the climate changes (say a new administration down the line), these voices might help roll back tariffs entirely. As of now, the 15% is set, but the groundwork for future easing could be laid by such alliance-building. Notably, no product-specific exclusions have been announced yet (unlike the original 232 steel tariffs which had exclusions for specific items). Korea might still press for a few key exclusions – for example, if there’s a specialty steel only POSCO makes that an American company needs, they could ask Commerce to exempt that product code from the tariff. Such fine-tuning often happens post-deal and could reduce pain in niche areas.

All in all, traditional manufacturing sectors are in defensive mode, aiming to “survive until conditions improve.” Kim Jeong-gwan’s philosophy of moderation and careful negotiation extends here: he is seeking ways that both sides can win rather than a zero-sum outcome . For instance, if Korean steel firms invest in American facilities, they win contracts and Americans get jobs – making a case to possibly relax tariffs in the future. He often says that what one side sees as reasonable, the other may see as unreasonable , implying the need for empathy and flexibility. By encouraging Korean companies to invest in the U.S. or do things that benefit the U.S. economy (like the $350 bn package itself), he’s effectively betting on reciprocity: as Korean firms become intertwined in the U.S. economy, the U.S. will have less incentive to impose harsh tariffs on them. This is a long-term strategy to create an environment where the alliance and economic integration act as a buffer against protectionism.

Kim has reassured domestic industries that “$350 billion going to the U.S. isn’t all a loss – it will help our companies in many ways” . In steel and petrochem, that is arguably true if Korean firms end up supplying materials for projects financed by that money. He’s essentially telling them to hang tight, adapt, and where possible, turn the situation to their advantage (e.g. “use the fund to get contracts”). The success of these measures will vary by sector and company; some smaller firms might still struggle or exit the U.S. market. But at a macro level, Korea’s traditional industries are leveraging state support, creativity, and the resilience of their U.S. business relationships to weather the storm. If the strategy works, they will come out leaner and perhaps more diversified, though the adjustment period could be painful. The government appears ready to intervene if things get too painful – that commitment alone gives businesses some confidence to continue rather than abandon the U.S. market entirely.

Comparison with Other Countries (Japan, EU) – Differences in Strategy

In analyzing Korea’s negotiation approach and outcomes, it’s very useful to compare it with how Japan and the EU handled similar U.S. tariff pressures. All three (Japan, EU, Korea) were targets of Trump’s aggressive tariff campaign, and each responded in its own way, reflecting different strategic calculations and domestic considerations.

Japan moved swiftly and decisively. It reached an agreement with the U.S. by July 22, 2025, making it the first major ally to settle. Japan’s deal, as noted earlier, locked in 15% tariffs in exchange for a huge $550 billion investment commitment . Observers noted that Japan’s package was roughly 90% larger than Korea’s proposed package (since $550 bn vs $350 bn is +57%, but in Korean media it was often framed that Japan paid “close to double” what Korea might, given Japan’s economy ~3x Korea’s). There was domestic commentary in Korea that “Japan gave 90% of what the U.S. wanted” – essentially saying Japan capitulated to nearly the full extent of U.S. demands to quickly clinch a deal.

Indeed, the terms Japan accepted were quite onerous: for example, Tokyo yielded to the U.S. insistence on the 90% profit take above a threshold , and it allowed the U.S. broad say in how the money is used (Trump can allocate Japanese funds to projects he chooses). In return, Japan got the immediate relief of tariff reduction and some assurances. This approach can be seen as Japan prioritizing short-term stability and strategic alignment (avoiding any rift with the U.S. at a sensitive time, given regional security concerns with China/North Korea) over haggling for better economic terms.

However, Japan was not completely meek. As mentioned, Japan’s negotiators, while agreeing to big headline numbers, quietly included protections in the fine print. Kim Jeong-gwan pointed out that “if you look closely, the Japan deal has clauses that allow Japan to break the agreement if it becomes unfavorable or violates domestic law” . This is a significant escape hatch. It means if the U.S. tried to abuse the deal or if the deal caused internal problems (say, conflict with Japanese laws or overwhelming domestic opposition), Japan left itself an option to back out. It’s essentially a safeguard for sovereignty. Additionally, Japan ensured that its companies benefit: e.g., Japan’s investments will lead to projects where Japanese firms are primary contractors or suppliers, ensuring a chunk of that $550 bn flows back to Japanese industry. In effect, Japan opened its wallet widely but also set it up so that a lot of that money is coming back home in the form of contracts.

One concrete example: the Alaska LNG pipeline investment by Japan, valued at tens of billions, will likely involve Japanese firms providing steel, engineering, and services. So, Japan invests money (appeasing Trump’s ask), but Japanese industry gets a huge project to work on (so the money isn’t “lost” so much as redirected to Japanese companies working on U.S. soil)  . Japan also got the U.S. to include a clause that if any of the deal’s terms conflict with Japan’s domestic laws or ordinances, Japan can consider the deal void – a reflection of Tokyo’s careful legalism to protect its autonomy.

The European Union, a bloc of 27 countries, had its own approach. The EU initially was resistant – in 2018, recall, the EU even threatened counter-tariffs and achieved a temporary truce by promising to buy U.S. soybeans/LNG. In 2025, faced with a fresh tariff threat (Trump threatened 30% on EU goods), the EU engaged in urgent negotiations and by July 27/28 reached an agreement . The EU’s deal involved massive commitments: as outlined, $600 bn investment and $750 bn energy purchases . Politically, this was sold to EU members as the cost to avoid disaster (30% tariffs could have crippled European car exports and many other sectors). They also highlighted that it aligned with EU goals of energy diversification (the LNG buys help cut ties with Russia, which since the Ukraine war was an overarching EU priority).

Still, EU officials were not exactly celebrating. Reports in European media described the deal as “choosing the lesser evil” and lamented that the EU, which wanted zero tariffs, had to accept 15% – meaning the “best outcome” (status quo free trade) was off the table . There was a sense that “we avoided the worst (no 30% trade war), but we also lost what we had (near free trade under decades of WTO/FTA regimes).” European Commission President von der Leyen framed it diplomatically, but internally it was seen as a tough pill to swallow. The EU did manage to negotiate some nuance in tariffs – for example, certain sectors remained tariff-free (like aircraft and specific pharmaceuticals) . They also integrated the deal with security concessions (agreeing to buy more U.S. defense equipment), highlighting how the U.S. used tariffs to coerce not just economic but also geopolitical outcomes (a point not lost on Korea, which saw that U.S. pressure on EU went beyond trade into energy security and defense).

For the EU’s strategy, one could say it was pragmatic and interest-driven: they quickly calculated that paying ~$1.35 trillion (investments + energy buys) over some years was an acceptable cost to protect their multi-trillion-dollar export industry from 30% tariffs, and to secure strategic energy needs. They also likely banked on the fact that some of these promises might be hard to track or enforce (e.g., the EU buying $750 bn in energy in 3 years would require an unprecedented ramp-up of imports – some analysts call it more of a “political commitment” than a realistic target ). The EU took a deal-making approach: give Trump enough to declare victory and go home, then manage the details later on their own terms (if the U.S. doesn’t closely monitor each euro invested or each cubic meter of LNG, the EU might not fully reach those numbers, or they might count existing planned investments).

Now, South Korea’s approach has been distinct in several ways:
• Patience and thoroughness vs. speed: Korea did not rush to sign a deal in July, even as Japan and EU did. This exposed Korea to a period of uncertainty (August–September) where, had talks collapsed, it could have faced a snapback to 25% tariffs while Japan/EU enjoyed 15%. Domestically, some worried that “Japan already secured stability, but Korea is dragging its feet and could fall behind.” However, the Korean government contended that taking the time to get a better deal was worth it, rather than hurriedly accepting terms against its long-term interests . Kim emphasized that Korea’s strategy considered long-term national interest and industrial connections, not just immediate relief . This meant enduring some pain and risk in the short term (like the month of August where the deal details were unresolved and tensions ran high) to potentially secure a more favorable outcome.
• Hard bargaining on terms: Because Korea waited, it could observe the Japan and EU deals in detail. Korean negotiators reportedly dissected the Japan MOU and EU agreement to identify which clauses were most problematic (e.g. the profit-sharing 90:10, or overly broad U.S. discretion) and decided to fight those in its own deal. Indeed, Korea has pushed back vigorously on the “Japan model” profit clause, to the point that talks stalled over it. While this frustrated the U.S. (Lutnick saying “no flexibility” and effectively “just accept like Japan did” ), Korea remained firm that it “cannot accept an agreement where the U.S. takes all the gains” . By doing so, Korea likely will get a softened version of that clause or some compromise. Another example: seeing EU had to buy $750 bn energy, Korea offered a far smaller $100 bn – arguably proportional to economy size, but also because Korea was willing to push back, whereas EU offered a huge number to close the deal quickly. Korea clearly said no to certain “toxic” provisions (Kim called some U.S. asks “독소조항”, meaning poison pill clauses) and because the U.S. also values Korea as an ally, the U.S. didn’t walk away but continued negotiating on those points.
• Structure of the commitment: Japan’s approach was very much government-driven – the $550 bn is largely public sector money (direct government funding or government-facilitated consortia). Korea, by contrast, is devising a fund-based, phased approach involving both public and private capital . This not only spreads the burden but also provides flexibility: the fund can invest in projects over time rather than Korea handing a lump sum upfront. It might also mean if projects underperform or circumstances change, Korea can adjust future investments. Essentially, Korea negotiated a more flexible implementation, whereas Japan’s was a bit more set in stone. This reflects Korea’s insistence on not committing beyond realistic capabilities. For instance, the initial U.S. demand was rumored around $400 bn; Korea offered $350 bn, noting that $100 bn was what Korea originally floated and it had already stretched to more than triple that . They held the line at $350 bn, whereas Japan basically agreed to the $550 bn reportedly asked of them (which some in Japan critiqued as overkill given even the U.S. didn’t expect the full amount).
• Communication and alliance management: Korea had to manage the U.S.’s perception carefully. By delaying, some U.S. hawks might perceive Korea as dragging or being a less cooperative ally. To counter that, Korea’s messaging (both public and private) stressed that “the negotiation is continuing in good faith” and that Korea fully intends to uphold the alliance (Kim repeatedly said this is about alliance and long-term future, not just dollars) . Seoul also engaged U.S. stakeholders beyond the administration – e.g., members of Congress, business leaders – to reassure that Korea’s delay was just to sort details, not to resist the U.S. strategically. This multifaceted diplomacy seems to have worked in that the U.S. did not prematurely cut off talks. There was a scare: around mid-September, Lutnick and even Trump himself voiced impatience (the CNBC interview on Sep 11 where Lutnick said “Korea didn’t sign when President Lee was here, no flexibility now” made headlines ). But notably, even then Trump planned to meet Korea’s president, signaling he was willing to finalize things amicably if Korea came around . In essence, Korea played for time but not in a confrontational way – it kept emphasizing alliance and even, at times, flattered the U.S. (Kim noted he understands the U.S. position, citing Trump’s own book to show empathy ). This likely helped temper U.S. frustration.
• Scale of concessions: In raw numbers, Korea’s concessions ($350 bn + $100 bn energy) are smaller than Japan’s or the EU’s – which makes sense given its smaller economy. But proportionally, Korea arguably conceded less relative to GDP than Japan did. Japan’s $550 bn is enormous even for its economy; some Japanese media said their government “overpaid” just to secure auto tariffs first. Korea showed more cost discipline, insisting it couldn’t go as high as the U.S. asked. This may pay off if, for example, some of that $350 bn ends up not fully utilized (if profitable projects aren’t found for all of it, etc.). The U.S., wanting to keep Korea onside, might not enforce every dollar if the spirit of investment and alliance is maintained.

A key question is: did Korea’s slower, more meticulous strategy yield a better outcome than Japan/EU’s rapid acquiescence? The answer will become clear once the final deal details are out. But indications are that Korea will indeed get a somewhat more favorable deal in terms of conditions. For example, if Korea successfully removes or lessens the 90% profit siphon, that’s a win Japan didn’t get (Japan will now likely seek to quietly renegotiate that later if Korea got a better term – though Japan’s official line would never admit being second). If Korea secured a stronger “snapback safeguard” (like clarifying exactly what constitutes non-compliance before tariffs return), that’s another improvement. Also, Korea might get extra “goodies”: for instance, as part of deal-closing, maybe the U.S. gives a nod to a permanent currency swap (which Japan had in place already via the Fed’s arrangements with advanced economies, but Korea doesn’t; getting one would be a big deal for financial stability) . Or perhaps the U.S. agrees to something like easing visas for Korean professionals (the AsiaToday report mentioned Lutnick spoke positively about visas for Korean workers to build factories , which might translate into a new visa quota or scheme for Koreans – a significant benefit if achieved). Japan’s deal didn’t really include such things, whereas Korea’s protracted talks allowed it to bring in these side issues and bargain for them.

The downside of Korea’s approach was time risk. There was a period where the world wondered if Korea might fail to reach a deal at all – which could have been economically damaging and politically isolating. Thankfully for Korea, the timeline aligned with a strong incentive for the U.S. to also close out an ally deal; Trump likely wants all ally deals done before the 2026 campaign heats up, to claim success. As September waned, pressure mounted on Korea because Japan’s tariff cuts took effect mid-Sep and the U.S. indicated no further extensions beyond early autumn. Korea likely realized it had gotten as much improvement as it could and that it was time to finalize. In fact, Korean officials in mid-September started projecting optimism that “we’re nearly there; just a bit more coordination at home and we can conclude”, which suggests they felt the deal was acceptable enough to sign soon (with perhaps a few face-saving tweaks in the interim) .

In summary, Japan chose speed at the expense of possibly over-paying; the EU chose a grand package to tie trade with broader strategic goals; Korea chose a protracted negotiation to fine-tune terms and ensure it wasn’t sacrificing critical interests. None of them walked away – all ultimately aligned with the U.S. ask of 15% tariffs and big investments, showing the leverage the U.S. had. But the nuances matter. If Korea’s strategy results in even, say, $50 bn of its $350 bn being saved or reaped by Korean firms rather than handed over, that’s significant. Or if it means one less onerous condition that could have hamstrung Korean policy, that’s a real win for sovereignty.

There is also a narrative aspect: by holding out a bit, Korea demonstrated to its public that it didn’t just roll over; it fought for better terms. Politically, this is valuable for the Korean leadership. In contrast, Japan’s government faced some criticism at home for the perception of giving in too easily (though it mitigated that by highlighting the safeguards it got). In Korea, if/when the deal is signed, the government can say “Look, we got a deal similar to Japan/EU, but we ensured it’s fairer for us. We protected our key interests.” That helps in framing the outcome as a more balanced “win-win” rather than a humiliation.

From the U.S. perspective, by September they likely concluded that it’s better to accommodate Korea a little and finalize the alliance deal than to punish Korea and risk a rift. The fact that American experts were gently urging Korea to hurry but also understanding its internal process  suggests the U.S. foreign policy community values keeping Korea on board more than squeezing every last drop out of them. Trump, too, would want to tout a done deal rather than an ongoing fight with Korea (especially as North Korea remains a concern and as he eyes re-election).

Thus, Korea’s gamble – taking more time – appears to have been calculated and, to a large extent, successful. It’s a case of a smaller ally using smart negotiation to slightly tame the demands of a superpower, without defying it. As one might say, Korea didn’t flip the script, but it edited some lines in the script in its favor. The coming “Korea-model agreement” will likely reflect that: fundamentally similar structure (tariffs 15%, big investment), but some important differences in execution and mutual obligations that make it more palatable for Seoul.

Future Negotiation Outlook and ‘Doctrine of the Mean’ Appraisal in Negotiation Efficacy

As of this writing, the US–Korea tariff negotiations are in their final stretch, with a comprehensive agreement expected to be announced soon (the situation is fluid, but indications suggest an agreement in principle has been reached, pending final polishing of language and domestic vetting). The outlook going forward can be discussed on two levels: the immediate resolution of this negotiation and the long-term implications for US–Korea economic relations. Additionally, it’s worth evaluating how Minister Kim’s philosophically guided approach (invoking “중용” or the Doctrine of the Mean) has fared in practice during this arduous process.

Near-term prospects (the next few weeks/months): Negotiators are working to finalize the text of the agreement and resolve the last few sticking points. By mid-September, it was reported that “the big framework has been agreed, but detailed implementation plans still need final agreement” . The core unresolved issue was how to structure the $350 billion investment fund – specifically, how decisions are made and how profits are shared . Korea has stood firm that “it cannot be a structure where the U.S. takes everything”, seeking a fairer distribution of returns . The U.S. side has acknowledged this and behind closed doors likely made some concessions (perhaps accepting a profit split more favorable to Korea than the Japan model). Once this is ironed out, the agreement text can be initialed. We expect a joint announcement possibly accompanied by a high-level meeting (maybe President Lee and President Trump meeting, or at least a ministerial signing ceremony). Both governments will then present it as a win: the U.S. will highlight the huge investments secured and “level playing field” tariffs, while Korea will emphasize having averted worst-case tariffs and “protected our national interest through a fair deal.”

One must note that even after the deal is signed, not everything is fully resolved. The agreement will outline implementation mechanisms – for example, perhaps a joint committee to supervise the investment projects, timelines for when investments should be made, review clauses, etc. So the negotiation in a sense transitions into an implementation phase, where more negotiations will happen in sub-committees or periodic meetings. Kim himself said, “Japan’s deal isn’t really over; they will keep negotiating through specific projects”, implying that Korea too sees this as an ongoing process . This means constant vigilance: if disagreements arise on, say, whether Korea has met a milestone or how to interpret a clause, those will need diplomatic handling. The signed agreement will likely include a clause like “tariffs can revert to 25% if either party fails to fulfill commitments” . This is a dangling sword – hopefully never used, but it will keep pressure on Korea to follow through. Similarly, Korea might have an exit clause (like Japan does) but using it would be drastic, so it’s more a theoretical safeguard.

Looking at the broader long-term implications, this negotiation’s outcome will set a precedent for US–Korea relations under a more transactional U.S. policy. It effectively replaces or overrides portions of the KORUS FTA with a new framework of managed trade and investment. It signals that, at least under the current U.S. administration, ally status alone doesn’t guarantee preferential trade terms; allies are expected to pay in other ways to maintain access. Korea’s challenge will be to institutionalize the positive aspects of this new arrangement while minimizing its risks. That could involve:
• Deepening political ties to ensure the economic deal sticks. For instance, Korea might seek Congressional backing for parts of the deal (though trade agreements typically go through Congress, this is an executive agreement; still, getting bipartisan support for the security/economic rationale can protect it from sudden shifts).
• Engaging in U.S. domestic outreach: Korean companies investing in the U.S. should make sure those investments are high-profile and in states/districts of influential lawmakers. The more Korea’s contributions are recognized in the U.S., the more political capital Korea gains, which can be useful if any disputes in implementation arise. Essentially, Korea will want the narrative in the U.S. to be “Korea is doing its part as a great ally, investing and creating jobs,” so that if Trump (or any successor) ever considered saying “Korea isn’t fulfilling the deal,” there’d be pushback from within the U.S.
• Monitoring and flexibility: The agreement might span many years (some investments out to 2029 per initial plans). If the global situation changes – say a recession or a new technology shift – Korea might need to renegotiate portions. The deal likely has review clauses. Seoul should prepare for those reviews by gathering evidence of its compliance and also any issues encountered. With Kim’s methodical approach, one can imagine Korea will approach implementation like a continuing negotiation, always prepared to discuss adjustments rather than simply executing blindly.

Now, turning to Kim Jeong-gwan’s “중용” (Doctrine of the Mean) approach, we should assess how effective it was in achieving Korea’s goals:

Kim’s emphasis on sincerity in even small matters, patience, and not acting rashly indeed defined Korea’s negotiation stance. By not reacting angrily to provocation and not rushing into a deal, he maintained a middle ground course. This allowed for:
• Consistency and credibility: The U.S. saw that Korea was serious (Kim came prepared, citing data, invoking even American statements to make his case) and not prone to emotional flip-flops. This likely built respect. For example, when things got heated (voices raised, etc.), Kim didn’t storm out or issue public ultimatums; he kept at it, which actually reinforced the perception that Korea truly wanted a deal – just a fair one . His demeanor – described as earnest and calm unless pushed to defend a point – probably made it easier for U.S. negotiators to engage without feeling insulted or cornered.
• Securing win-win elements: By steadfastly advocating the mutual benefit angle (he often said, “we are looking for a win-win final agreement” ), Kim reframed some of the discussion. Instead of just “U.S. asks, Korea yields”, he proposed ideas where both could gain. The investment fund concept, for example, can be seen as such a win-win: the U.S. gets money for projects; Korea’s companies get business in those projects. Kim’s philosophical bent made him highlight such synergistic outcomes, aligning with the Zhongyong idea of achieving harmony through balanced action. In contrast, a more zero-sum negotiator might have missed opportunities to create value for both sides and just haggled over percentages.
• Avoiding breakdown: It is noteworthy that despite very trying moments (the ICE incident, Trump’s threats, Lutnick’s public pressure), talks never broke down completely. Kim’s restraint (not walking away, not making threats of his own) ensured the door stayed open. Even when domestic voices in Korea argued “maybe we should just accept tariffs and not give in,” Kim internally may have thought about that (he admitted he “sometimes wondered if we should just take 25% tariffs” ) but he ultimately rejected it as not in the long-term national interest. That calm resolve to continue negotiating, rather than taking a drastic step, exemplifies the Doctrine of the Mean – not yielding to extremes of emotion or despair. This persistence paid off: the U.S. side remained at the table too, indicating they felt a deal was still possible and that Korea was negotiating in good faith.
• Public and alliance reassurance: Kim’s philosophical references weren’t just for show; they served to communicate to multiple audiences. To the Korean public, invoking a revered text like “중용” signaled that the negotiation was being handled with wisdom and deep consideration, not rashly. It helped rally support or at least patience among stakeholders in Korea (business community, media, opposition, etc.) as they trusted he had a thoughtful strategy. To the U.S., references to Trump’s own negotiation style and demonstration that Kim had done his homework (reading Trump’s book, quoting it)   may have flattered Trump and showed cultural respect, which can go a long way with him. Also, by quoting The Art of the Deal, Kim subtly communicated “I understand your game, and I can play it too,” which might have earned a modicum of respect from Trump – who reportedly appreciates those who stand up to him if done the right way.

Of course, some might argue that philosophy alone doesn’t win negotiations – power dynamics do. The U.S. had the power and Korea mostly had to accommodate. There’s truth in that; ultimately Korea is accepting a non-zero tariff and making large concessions because it had to. But Kim’s approach likely optimized what Korea could achieve within those constraints. Perhaps a more combative negotiator could have tried brinksmanship – but that risked collapse and 25% tariffs reinstated. Or a too yielding negotiator might have signed in July without the improvements Korea managed to get by September. Kim’s middle-path approach steered between those extremes. In that sense, it was effective: Korea avoided both a collapse and an unnecessarily bad early deal.

It’s also crucial to note the impression on the U.S. side. Lutnick’s remarks to media, while tough, also noted that negotiations were a process of “push and pull where, as allies, we search for a win-win” . That phrasing almost mirrors Kim’s, suggesting Lutnick recognized Korea’s collaborative intent. Trump’s willingness to personally engage toward the end (scheduling a meeting with President Lee)  shows that he saw value in closing amicably – if he felt Korea was being obstinate or disrespectful, he might have just tweeted something rash and blown it up. That he didn’t indicates that Korea’s approach kept Trump on-side enough that he preferred a deal to punishing Korea. Kim’s careful balance – sometimes firm (even pounding the table) to show commitment , but never disrespectful – likely contributed to this outcome.

In evaluating “중용” as a negotiation philosophy, one might conclude: It’s not a common approach in trade talks (which are often very transactional and interest-based), but in this unique case of ally negotiations under duress, it proved valuable. The Doctrine of the Mean emphasizes moderation, empathy, and long-term virtue over short-term gain – those principles helped Korea avoid rash moves and kept focus on the overarching goal of maintaining the alliance’s health. Kim once said, “I try to remember that even a small act of sincerity can ultimately benefit the country,” and indeed by dotting i’s and crossing t’s (for example, insisting on clarity in terms, not glossing over “small” details), he ensured Korea wasn’t duped or trapped by fine print .

In conclusion, as the negotiations wrap up, Korea is poised to emerge with a deal that, while requiring concessions, preserves its critical interests and solidifies its alliance with the U.S.. The outcome will likely be framed domestically as “we averted a trade war and protected our future”, and internationally as “the U.S. and Korea have upgraded their economic partnership”. Minister Kim’s blend of philosophical steadfastness and pragmatic strategy was a key driver in reaching this outcome. The “win-win final point” he often spoke of now seems within reach . The next steps will involve implementing the deal’s commitments – which will be another test of Korea’s diligence and the alliance’s strength. If the spirit of 성실 (sincerity) that Kim emphasized carries into implementation, one can be hopeful that the US–Korea economic relationship will enter a new, more resilient phase. Korean industries, though challenged by the new environment, have been handed not just a tariff burden but also new opportunities (via investment and collaboration) – it will be up to them to capitalize on these. And for Kim Jeong-gwan and his team, their handling of this crisis will likely be remembered as a case study in applying classical wisdom to modern diplomacy – a balance of principle and pragmatism that changed the course of a daunting negotiation.

Sources: Kim Jeong-gwan’s remarks and press interviews (e.g. Kyunghyang Shinmun  , Financial News  , Asia Economy  ), details of the tariff deals from official briefings and media (Korean Govt. Policy Briefing via Busan Ilbo  , Hankyung and Hankyoreh for Japan/EU deals  ), and industry impact analysis from outlets like CEO Score and Hankyung . These provide the basis for the facts and figures discussed above and corroborate the sequence of events and strategies employed.