After a sharp decline of 14.3% in exports to the United States, South Korea plans to hold trade negotiations with the U.S. this Thursday

According to Zhitong Finance APP, South Korea and the United States will initiate trade negotiations this week, as South Korea, an export powerhouse in Asia, is trying to persuade the Trump administration to ease punitive tariffs that are beginning to impact the economy.

U.S. Treasury Secretary Scott Basset and Trade Representative Jamieson Greer will meet with South Korean Finance Minister Choi Sang-mok and Minister of Trade, Industry and Energy Ahn Duk-geun at 8 a.m. local time on Thursday in Washington.

South Korea's acting president Han Duck-soo stated on Monday during discussions with key aides about negotiation strategies that they will "seek a win-win solution through calm and serious negotiations."

The export-dependent South Korean economy is vulnerable to the impact of Trump's aggressive import tariffs. Preliminary trade data released on Monday indicated that a prolonged trade war could cause significant damage to the fourth-largest economy in Asia. The preliminary trade data showed that South Korea's exports to the U.S. fell by 14.3% in the first 20 days of April.

Securing U.S. trade concessions is crucial for stabilizing the South Korean economy. The political crisis triggered by former President Yoon Suk-yeol's failed declaration of a state of emergency continues to escalate, and after his impeachment by the National Assembly, South Korea will hold early elections on June 3. It remains uncertain how far the acting president can advance in negotiations during the transition period. Currently, Lee Jae-myung, the candidate from the largest opposition party, the Democratic Party, is leading in the polls.

South Korea and Japan are among the first countries to engage in tariff negotiations with the U.S. Other countries are preparing to reach agreements to lower import tariffs and will closely monitor the negotiation outcomes to understand what concessions Trump will attempt to extract from them.

South Korea, a key ally of the U.S., is subject to a comprehensive tariff of 25%, which has been temporarily reduced to 10% for a period of 90 days. Like other countries, South Korea's automotive, steel, and aluminum products also face a 25% tariff.

Economist Hyosung Kwon stated, "Assuming current tariffs remain unchanged, we estimate that by 2028, trade shocks could lead to a GDP decline of up to 0.7%. Fiscal support measures may alleviate the shock but cannot fully offset it. We currently expect economic growth in 2025 to slow to 1.0% from 2.0% in 2024, lower than our January forecast of 1.5%."

The South Korean government has been reviewing several proposals to submit to the Trump administration to narrow the trade surplus with the U.S. In 2024, South Korea's trade surplus with the U.S. is expected to increase by about 25% year-on-year, reaching $55.7 billion. Topics such as shipbuilding cooperation, the Alaska oil pipeline project, and defense cost-sharing may be discussed at the negotiation table.

Early trade data shows that South Korea's overall exports fell by 5.2% year-on-year in the first 20 days of this month.

Cho Chuel, an analyst at the Korea Institute for Industrial Economics and Trade, pointed out, "These data seem to reflect that businesses are taking a wait-and-see attitude as the government attempts to negotiate lower tariffs." He added that depending on the progress of the negotiations, the data may further decline or reverse.

During this political vacuum, South Korean companies such as Samsung and Hyundai are accelerating the announcement of investment plans in the U.S. in hopes of tariff exemptions. POSCO will make equity investments in Hyundai Motor Group's steel plant project located in Louisiana Despite the Bank of Korea maintaining the benchmark interest rate at 2.75% last week, it warned that trade policies are exacerbating the downside risks to growth. The bank cautioned that the economy may experience negative growth in the first quarter