Lee, Trump end first summit on cordial note, but questions remain

South Korea’s proposal to help revive the US shipbuilding industry proved pivotal in setting a positive tone for President Lee Jae Myung’s first summit with President Donald Trump.

But beneath the cordial atmosphere, many of the most sensitive trade issues between the allies were left unsettled.

Meeting face-to-face for the first time in Washington on Monday, the two leaders affirmed broad common ground on security and trade, including Seoul’s $150 billion shipbuilding initiative, dubbed “Make American Shipbuilding Great Again” or MASGA. They also pledged close coordination on North Korea.

Yet their talks sidestepped the most contentious matters, such as sectoral tariffs on South Korea’s mainstay exports — semiconductors and automobiles — and US demands for greater concessions on agriculture and the cost of American troops stationed on the Korean Peninsula.

Speaking before and after the summit, Trump declared that the deal struck with Seoul in late July was final, insisting that South Korea would honor a 15% tariff agreement and large-scale investments in the world’s largest economy.

“They had some problems with it, but we stuck to our guns,” Trump told reporters after the summit. “They’re going to make the deal that they agreed to make.”

The rate, though lower than the 25% tariff he had previously threatened, still leaves major uncertainties.   

SHARED STAGE, DIFFERENT SCRIPTS

Washington has yet to lower levies from 25% to 15% on Korean automobiles and auto parts, nor has it clarified duties on Korean semiconductors and pharmaceuticals.

Officials have said only that South Korean chip exports will face tariffs no harsher than those applied to Japan or the European Union, both of which enjoy significantly lower barriers.

Kim Yong-beom, the presidential policy chief, said the two governments would form a working group to iron out the details.

“We will form a working-level task force to continue negotiations on the implementation details within the broad framework agreed by the two leaders,” he told reporters in Washington.

Still, expectations ran high for a more definitive outcome.

“We expected the two leaders to settle the details at the summit, but the result fell short of expectations,” said a South Korean industry official, saying that delays favor Washington.

Differences also linger over Seoul’s vast investment pledges in the US, which Trump portrayed as funds “I own and control," a characterization South Korean officials do not agree with.

“We have put forward various ideas to safeguard our national interests,” Kim said.

For South Korean businesses, the lack of clarity is unsettling.

“The situation remains murky for businesses since the two countries have yet to set clear deadlines or limits for the new tariffs despite our massive investment pledges,” said Choi Byung-il, president of the Trade Strategy & Innovation Hub at law firm Bae, Kim & Lee.

UNCERTAINTIES OVER AGRICULTURE AND DIGITAL RULES

South Korea’s presidential office said the two leaders did not touch on opening the country’s agricultural market to US products during the summit.

But officials and analysts cautioned the issue could surface as a bargaining chip in future talks.

“The summit was not the right place to settle the question of opening Korea’s agricultural market,” said Cho Seong-dae, head of the Trade Policy Research Office at the Korea International Trade Association. “However, this is a contentious issue that could come up at any time in working-level talks.”

Indeed, at a South Korea-US business roundtable in Washington on the same day, US Commerce Secretary Howard Lutnick said Washington expects Seoul to further open its farm sector.

Digital regulations could become another flash point.

Speaking at a separate event on Monday, Trump warned that his administration would impose tariffs on countries that levy taxes or regulatory hurdles on US tech companies.

While the Lee-Trump summit did not address Korea’s digital rules, observers said Seoul could be affected. Washington has long criticized Korea’s Online Platform Fair Act and other measures as non-trade barriers and pressed for their withdrawal.

US MILITARY BASE OWNERSHIP

Another sensitive issue arose when Trump, during his meeting with President Lee, said he wanted US ownership of the land under its military bases in South Korea.

“Maybe one of the things I’d like to do is ask them to give us ownership of the land while we have the big fort. You know we spent a lot of money building a fort, and there was a contribution made by South Korea,” said Trump.

“But I would like to see if we could get rid of the lease and get ownership of the land where we have a massive military base.”

Trump's wish, however, is widely seen as nearly unrealistic.

Under the Status of Forces Agreement (SOFA), South Korea retains ownership of the land and provides it at no cost to US forces, while facilities must be returned once they are no longer needed.

Revising the SOFA rule would require National Assembly approval and could spark a political backlash amid concerns that Trump’s expansionist rhetoric might extend to South Korea.

Analysts said the comments were more likely a negotiating tactic, aimed at gaining leverage in ongoing security talks as Washington presses Seoul to shoulder a greater share of defense costs.

Still, the idea of US base ownership could quickly become another hot-button issue in the alliance.

Write to Jae-Young Han, Ji-Eun Ha and Sung-Su Bae at jyhan@hankyung.com
Sookyung Seo edited this article.