On Thursday, a South Korean delegation is expected to meet with U.S. counterparts for an initial round of trade negotiations. The agenda will likely include cooperation in shipbuilding, energy, and perhaps shared defence costs as Seoul seeks to lower tariffs.

South Korea, facing 25% reciprocal U.S. tariffs, was one of the first countries that the Trump administration initiated trade negotiations with. This follows its first face to face discussions with Japan, a key Asian ally who received 24% in tariffs.

Tom Ramage is an economic policy analyst based in Washington, DC at the Korea Economic Institute of America.

He said that given the fact that Seoul competes with other countries, and has a 90-day deadline before a tariff pause ends, it was likely that talks would be extended. They may even lead to a renegotiated U.S. Korea Free Trade Agreement.

Trump has repeatedly singled out South Korea as a key U.S. ally for its record-breaking trade surplus with the United States. In 2024, it was $55.6 billion, up 25 percent from 2023, and five times more than in 2019.

The U.S. Treasury Secretary Scott Bessent, and the Trade Representative Jamieson Greer will meet Finance Minister Choi Sangmok and Ahn Dukgeun in Washington, D.C., at 8 a.m. (11:20 GMT), as part of an International Monetary Fund/World Bank Group meeting.

Seoul confirmed that the meeting was at the United States' request. It comes after U.S. president Donald Trump and South Korea’s acting President Han Duck Soo spoke by phone on April 8 about shipbuilding, energy purchasing, an Alaskan Gas Project, and defence payments.

Han stated on Thursday that "the government will try to find a win-win situation between the two nations, focusing on three key areas: trade balance, LNG and shipbuilding, all under the principle of national interest as the top priority."

South Korean officials have hailed shipbuilding since the call as "a very important card" that it holds. South Korea is second in the world after China as a shipbuilder, and Trump specifically requested cooperation with the sector upon his return to power.

Seoul, on the other hand, has adopted a more conservative stance in relation to the Alaskan Gas Project, stating that participation could form part of a negotiated package. However, it also raised questions regarding its profitability.

South Korea's automotive sector is considered particularly vulnerable to tariffs as 49% of the country's total auto exports are cars sold to the United States.

Seoul announced emergency measures to support major exporting companies like Hyundai Motor and Kia.

Ahn, the Seoul mayor, said that the city was ready to pay for the 28,500 U.S. soldiers South Korea hosts. Later, Foreign Minister Cho Taeyul informed lawmakers the matter would not be treated as a package and instead, it should be handled separately.

Seoul's delegation, which will be preparing for the discussion on non-tariff obstacles, will include representatives from eight different Ministries: Finance, Trade, Foreign Affairs, Technology, Transport, Environment, Agriculture and Health.

South Korea is one of three Asia-Pacific nations that has a comprehensive trade agreement with the United States. This pact eliminates nearly all tariffs. The agreement was signed in 2007, but was revised in 2018, during Trump's second term, after he called the original deal "a terrible deal".

Leading by Example

South Korea is still undergoing its most serious political crisis in years.

The snap election for the presidency will take place on June 3 after former president Yoon Suk Yeol has been impeached this month and removed from his office over his failure to declare martial law.

Oh Suk Tae, economist at Societe Generale, said: "We expect the U.S. and Korean governments to make progress in their negotiations only after the snap election."

Oh stated that it would be particularly difficult for South Korea under an acting President to commit to any firm commitments on energy projects or defence costs.

Han, however, has expressed in interviews this week his willingness to come to a compromise. He said that the country would not fight Washington, as it owed the U.S. money for the recovery of the 1950-1953 Korean War.

He has not also ruled out running for election.

If acting president Han Duck Soo appears to negotiate successfully tariff waivers for South Korea - particularly for its auto exports - he will position himself more as a candidate for the presidency, said economists from S&P Global Market Intelligence.

FACTBOX separate on trade negotiations.

(source: Reuters)