The United States\u2019 alliance with the Republic of Korea (ROK) remains strategically strong. Both governments have expanded cooperation on artificial intelligence (AI), shipbuilding, nuclear energy, semiconductors, and defense. Yet beneath the surface, a few areas of friction continue to percolate. Most are economic rather than military, reflecting the Trump administration\u2019s emphasis on revitalizing domestic manufacturing and ensuring reciprocal trade relations. However, South Koreans are cognizant that economic and security issues are closely intertwined, particularly under the second Trump administration. In the Q&A below, Brookings Senior Fellows Andrew Yeo and Kari Heerman discuss with Senior Research Assistant Hanna Foreman the state of U.S.-South Korea relations and the path forward for economic cooperation and technology investments.<\/p>\n
Hanna Foreman Kari Heerman More consequentially, the administration has largely preserved the tariff architecture<\/a> first introduced on \u201cLiberation Day\u201d by shifting from the International Economic Emergency Powers Act (IEEPA) to other authorities. The U.S.-Korea Strategic Trade and Investment Deal<\/a> capped additional duties at 15%.<\/a> That rate became inoperative when the IEEPA tariffs were struck down, leaving the new Section 301 action to govern South Korea\u2019s tariff treatment.<\/p>\n The next question is whether the separate Section 301 investigation into structural excess capacity<\/a> becomes the vehicle for further tariffs. The issue is not simply whether tariffs rise, but whether the Trump administration changes the relative tariff treatment of South Korea and its competitors, reshaping preferential access to the U.S. market.<\/p>\n Hanna Foreman Kari Heerman Beyond the current administration,\u00a0the United States is unlikely to return to the trade policy consensus of the\u00a0previous\u00a0three decades.\u00a0There is broad\u00a0agreement\u00a0in Washington\u00a0that the\u00a0previous\u00a0system did not do enough to address economic security, resilience, or the challenges posed by China\u2019s nonmarket practices.\u00a0A contested geopolitical environment has strengthened the\u00a0perception\u00a0that economic openness alone is not a sufficient organizing principle for U.S. trade policy.<\/p>\n What is much less settled is what trade policy should be designed to\u00a0achieve\u00a0and, by extension,\u00a0the\u00a0institutional architecture needed to sustain it.\u00a0As such, allies should expect continued experimentation with different trade tools and legal authorities.\u00a0That creates opportunities as well as risks.\u00a0A\u00a0future administration may place greater emphasis on cooperation with allies. If so, that cooperation is likely to be strongest where\u00a0strategic and economic interests genuinely align, as in U.S.-South Korea cooperation on shipbuilding and semiconductor manufacturing.<\/p>\n Hanna Foreman Andrew Yeo What is at stake is less the outcome of a single regulatory case than confidence in South Korea\u2019s digital governance. If Washington concludes that Korea\u2019s regulatory system disproportionately burdens foreign firms, it could complicate cooperation on digital trade, AI, and investment. At the same time, Seoul faces a legitimate challenge: maintaining robust privacy and competition standards while assuring investors that enforcement is transparent, technology-neutral, and predictable. The Coupang dispute is unlikely to derail an alliance that Washington and Seoul see as a \u201clinchpin for peace, security, and prosperity<\/a>\u201d on the Korean Peninsula and the Indo-Pacific. However, if criticism over market-access barriers, digital trade, and platform regulation becomes a recurring U.S. grievance<\/a>, it could spill over<\/a> into broader negotiations on trade, strategic investment, and emerging technology cooperation.<\/p>\n Hanna Foreman Andrew Yeo For Seoul, the objective is to establish South Korea as a leading AI manufacturing and production hub within trusted global supply chains, while deepening its role in next-generation AI infrastructure. For the United States, closer integration with Korean firms strengthens supply-chain resilience, expands access to advanced semiconductors and data-center capacity, and reduces dependence on China for critical technologies. More broadly, the summit underscores how the U.S.-ROK alliance is evolving beyond traditional security cooperation into an industrial and technological partnership, with Korea providing manufacturing scale that complements America\u2019s AI innovation leadership.<\/p>\n Hanna Foreman Andrew Yeo The more difficult task now is implementation. Success will depend less on new announcements than on whether the two governments can execute projects involving shipyard modernization, workforce development, supply-chain integration, and commercial and naval vessel production. While political support in both capitals remains strong, bureaucratic hurdles<\/a>\u2014including procurement rules, interagency coordination, financing, and technology-sharing restrictions\u2014could slow progress, resulting in misaligned expectations and frictions. Korean firms, including Hanwha Ocean, HD Hyundai, and Samsung Heavy Industries, have announced partnerships with U.S. counterparts, but as U.S. Commerce Secretary Howard Lutnick has argued<\/a>, translating those agreements into tangible industrial outcomes will take sustained coordination.<\/p>\n The Brookings Institution is committed to quality, independence, and impact.
Last November, South Korea committed<\/a> $350 billion in investments toward the U.S. shipbuilding and other strategic sectors in exchange for reducing tariff rates from 25% to 15%. Despite the breakthrough, the trade relationship hit another obstacle after the Trump administration imposed<\/a> new tariffs up to 12.5% in April, targeting South Korea and dozens of U.S. trade partners that Washington accused of inadequately enforcing bans on goods produced using forced labor. How would the imposition of Section 301 tariffs under the Trade Act of 1974 impact South Korea and other regional partners, such as Japan?<\/p>\n
Last week\u2019s Section 301 action<\/a> leaves South Korea\u2019s competitive position in the U.S. market largely unchanged relative to its regional peers. South Korea received the same treatment as Japan and Taiwan\u2014additional duties capped at 12.5% inclusive of most-favored-nation rates\u2014and our estimates<\/a> suggest only modest changes in average tariff rates for all three. China, by contrast, faces an additional 12.5% tariff on top of the otherwise applicable duty rather than an inclusive ceiling.<\/p>\n
Given the geopolitical discord over the Iran war and now a new set of tariffs, where do U.S. trade relations with its allies, including South Korea, go from here? Do you foresee any further reordering of global trade?<\/p>\n
I expect\u00a0this administration to continue\u00a0using\u00a0trade policy\u00a0actively, including\u00a0relying on different statutory authorities to use\u00a0tariffs as\u00a0leverage in both commercial and broader strategic negotiations.\u00a0I do not expect strengthening the multilateral trading system\u00a0to become a focus. Instead, the emphasis is likely to remain on bilateral bargaining, targeted agreements, and executive action.<\/p>\n
Shifting to issues more particular to U.S.-South Korea economic relations, the Trump administration and U.S. Congress have criticized South Korea\u2019s policies on market access and digital trade. More recently, the House Judiciary Committee released a report<\/a> addressing Seoul\u2019s \u201cdiscriminatory attacks\u201d against U.S. businesses. Can you briefly address the significance of the committee\u2019s report? What is at stake, and what risks do Seoul\u2019s digital trade practices present for U.S.-South Korea relations and its ambitions to be a leader in digital innovation?<\/p>\n
The House Judiciary Committee\u2019s July 2026 report<\/a>, \u201cClosed for Competition: South Korea\u2019s Discriminatory Attacks on American-owned Businesses,\u201d argues that South Korean regulators have engaged in discriminatory enforcement against American-owned companies, using Coupang, a Seattle-based e-commerce platform (often described as the \u201cAmazon of South Korea\u201d), as its principal case study. The report alleges that Seoul employed coercive investigations, excessive penalties, and burdensome regulations that violate commitments under the recent U.S.-South Korea trade agreement, thus creating an uneven playing field for U.S. technology firms. Seoul rejects<\/a> those allegations, maintaining that its actions against Coupang stem from a major 2025 data breach affecting millions of users and were taken under Korean privacy and consumer-protection laws without discrimination<\/a>. It also asserts that regulation of online platforms is shaped by antitrust practices rather than discrimination against U.S. companies.<\/p>\n
Transitioning to recent technological developments, South Korean President Lee Jae-myung traveled to San Francisco on July 24-25 and participated in an AI summit<\/a> that convened the heads of U.S. technology companies and South Korean conglomerates. Lee announced major partnerships between South Korean and American companies focused on AI chips, data centers, and digital infrastructure. How is South Korea positioning itself as a manufacturing and\/or infrastructure partner (e.g., chips and data centers) to U.S. AI firms, and what do the two countries stand to gain from the AI summit in San Francisco?<\/p>\n
South Korea is positioning itself not simply as a supplier of AI components, but as a core manufacturing and infrastructure partner for the U.S. AI industry. Lee\u2019s participation at the San Francisco AI Summit<\/a> reflected a deliberate strategy to combine Korea\u2019s strengths in advanced manufacturing with America\u2019s leadership in frontier AI models and software. The summit highlighted proposed partnerships between U.S. and South Korean firms\u2014reported to be worth up to $950 billion over time<\/a>\u2014covering high-bandwidth memory chips, foundry services, advanced packaging, AI data centers, and digital infrastructure. Korean conglomerates, including SK Group and Samsung, announced expanded cooperation with major U.S. technology companies such as NVIDIA and Broadcom to support growing AI demand.<\/p>\n
While Lee attended the AI summit in San Francisco, U.S. and South Korean officials launched the Korea-U.S. Shipbuilding Partnership Center (KUSPC) in Washington, DC, to facilitate Korean investment in the revitalization of the U.S. shipbuilding industry. What is the current state of play in U.S.-ROK shipbuilding cooperation?<\/p>\n
U.S.-ROK shipbuilding cooperation has entered an implementation phase. The launch<\/a> of the KUSPC provides the first permanent institution dedicated to connecting Korean shipbuilders with U.S. government agencies, industry, and training programs, as both countries seek to expand America\u2019s shipbuilding capacity. The center builds on the Korea-U.S. Shipbuilding Partnership Initiative announced<\/a> earlier this year and supports South Korea\u2019s planned investment in the U.S. maritime sector.<\/p>\n
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