Lee Administration Faces Test of Trade Capabilities... Attention on "July Package" Tariff Solution

President Lee Jae-myung Visits Joint Chiefs of Staff Combat Control Room

(Seoul=Yonhap News) Photo by Hong Haein = President Lee Jae-myung visited the Joint Chiefs of Staff Combat Control Room in Yongsan-gu, Seoul, on June 4, 2025, where he received a military readiness briefing from Chairman of the Joint Chiefs of Staff Kim Myungsoo and other military commanders before delivering remarks. [Provided by the Ministry of National Defense. Reproduction and database use prohibited]

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The first trade-related challenge faced by the new administration following the change of government is the negotiation of the "July Package" with the United States. In particular, the new administration's response strategy and negotiating stance have come under scrutiny after the United States announced that it would raise tariffs on Korean steel and aluminum from 25% to 50%.

According to the Ministry of Trade, Industry and Energy (MOTIE) on June 5, the government is currently holding working-level discussions with the United States and organizing the status of the negotiations. The government plans to report the related matters to the presidential office as early as this week and receive new policy guidelines from the new administration. An official from MOTIE stated, "While maintaining the overall framework of the negotiations, new guidelines are needed due to the change of administration. As the U.S. measures are having a real impact, we plan to reprioritize our response accordingly."

The problem is that a person in charge of overall trade policy within the presidential office has not yet been appointed. At present, MOTIE has no choice but to report trade policy matters directly to the President, making the reporting line and policy coordination channel unclear. The official said, "It is not even clear who is responsible for trade within the presidential office. It has not been decided whether to establish a dedicated secretary for trade under the Office of the Senior Secretary for Economic Affairs or to maintain the existing structure, so we have not been able to provide a progress report yet."

Amid these uncertainties, the most urgent issue is the U.S. decision to increase tariffs on steel and aluminum. Last month, the U.S. Department of Commerce announced that it would raise tariffs on Korean steel and aluminum products from 25% to 50%, based on Section 232. This is interpreted as the first concrete action to reinforce the protectionist stance of the second Trump administration, and it is placing considerable pressure on both the Korean steel industry and the government.

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MOTIE has stated that this issue is already included as an agenda item in the July Package negotiations. The July Package is a negotiation framework in which South Korea and the United States are comprehensively coordinating six areas, including tariffs, non-tariff measures, economic security, and digital trade, with working-level and high-level talks being conducted in parallel, targeting an agreement in July. The official explained, "In the ongoing negotiations, we are demanding the removal or easing of all tariff measures imposed by the Trump administration, including Section 232 and reciprocal tariffs. The steel and aluminum tariffs will be addressed in the same context."

However, the reality is far from easy. The United States is demanding specific concessions from South Korea as a precondition for removing existing tariffs. Another government official said, "The U.S. demands are clear, but our options are limited. Each ministry is currently discussing whether we can accept the conditions the U.S. is requesting in exchange for tariff removal."

Currently, the negotiation channel is being maintained at the working level. Under the leadership of Director Jang Seonggil of the Trade Policy Bureau at MOTIE, telephone and video consultations are being held frequently, and positions and information are also being exchanged through the Korean Embassy in the United States. A MOTIE official said, "Director Jang Seonggil is communicating directly with Washington, and when necessary, the embassy in the U.S. is also delivering messages. Basic contact is being maintained."

However, the high-level meeting in June that Minister Ahn Deokgeun of MOTIE suggested last month is now uncertain in both schedule and participants due to the change of administration. The official stated, "At the time, we were coordinating a high-level meeting for mid-June, but now it has not been decided who will lead the meeting or at what level it will be held."

In addition, the possibility of a government reorganization is expected to become another variable in the negotiation environment. The new administration is considering establishing a Ministry of Climate and Energy, and as a result, the transfer of certain functions and personnel from MOTIE is being discussed. The official said, "If a reorganization is announced, personnel transfers will be immediately frozen, and existing staff will likely be transferred as they are. Although there will be no immediate direct impact on trade affairs, there could be changes in the cooperation system for issues linked to energy and climate."

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