After Trump’s tariff talks, what lies ahead for the U.S. and South Korean economies?

Hello, I’m Thomas Park. The Trump administration has recently reached partial tariff agreements with major trading partners, further strengthening its protectionist stance at home. But negotiations with South Korea remain deadlocked, with no agreement in place—a situation that could create a clear divergence in the two countries’ economic prospects. In this column, I’ll look at the Trump administration’s tariff policy, the outlook for the U.S. economy in the fourth quarter, and the challenges facing South Korea without an agreement.

Trump Administration’s Tariff Negotiations Signal Stronger U.S. Industrial Strategy

In recent tariff talks with several countries, including those in Europe, Japan, and Mexico, President Trump has reached selective compromises, reaffirming the strategic goals of protecting U.S. industry and reshaping supply chains. But negotiations with South Korea remain on hold without a comprehensive agreement, underscoring the increasingly transactional and selective nature of the U.S. negotiating strategy.

* Some high tariffs on China remain in place

* Stronger “Made in America” requirements for strategic goods, including electric vehicles, batteries, and steel

* Refusal to extend tariff suspensions even for allies when their industries pose a competitive threat to the United States

These decisions strengthen the case for rebuilding U.S. manufacturing and creating jobs, while potentially providing a short-term boost to the economy in the fourth quarter.

U.S. Economic Outlook for the Fourth Quarter of 2025: Optimism Accompanied by Risks

1. Consumer spending and employment expected to remain resilient

Business sentiment is recovering alongside the Federal Reserve’s decision to hold its benchmark interest rate at 4.25%–4.5%, while government industrial policy appears to be spurring capital investment. Consumer sentiment is also expected to improve modestly as interest rates stabilize.

2. Investment growth centered on countries that have reached tariff agreements

Following trade agreements with Europe and Japan, foreign direct investment (FDI) and technology transfers from these countries are expected to increase. U.S. manufacturing employment could resume its upward trend.

3. Risk of renewed inflationary pressure

The return of high tariffs on some imports could push up consumer prices. If higher costs are passed on in industries heavily reliant on Chinese raw materials, the Fed’s rate policy could come under renewed pressure.

South Korea Left Without a Tariff Agreement, Facing Greater Economic Risks

South Korea is a key U.S. ally, but negotiations remain deadlocked in sectors where the two countries’ interests are most likely to collide, including electric vehicles, batteries, steel, and semiconductors. This brings several risks:

1. Greater uncertainty for South Korea’s major exports

* If tariff suspensions expire, South Korean batteries and steel products could face high tariffs

* A growing need to renegotiate supply contracts with U.S. companies

2. Risk of exclusion from U.S. subsidies, including those under the Inflation Reduction Act (IRA)

* The possibility of differential treatment for countries that have not reached an agreement

* Greater policy risk for Korean companies, including Hyundai Motor and LG Energy Solution, investing in the United States

3. Direct impact on the won and an export-dependent economy

* Further weakness in the won as the 1.75-percentage-point interest rate gap between South Korea and the United States persists

* A greater need to diversify export markets, accelerating efforts to expand again in Southeast Asia and the Middle East

Conclusion: A Turning Point for the U.S. and South Korea Calls for a Strategic Approach

The Trump administration is pursuing a short-term economic recovery and a longer-term industrial reset by reasserting its America First agenda. South Korea, meanwhile, is in a contradictory position: a “strategic ally” that could nonetheless be sidelined because its industrial structure is similar to and competitive with that of the United States.

The steps South Korea’s government and businesses need to take are clear:

* Build diplomatic and industrial strategy teams that can respond in real time to political and economic changes in the United States

* Pursue “industry-focused agreements” suited to the post-FTA era

* Expand cooperation that links technology and capital investment to gain recognition as a strategic U.S. industrial partner

Both the United States and South Korea are at a crossroads. Which side will first put forward a clear vision and strategically break through the “relationship without an agreement” will shape the next 10 years.

I’ll continue sharing firsthand perspectives from the field and offering insights to support your economic decisions.

See you in my next column.