Minister Kim Jungkwan: "25% Tariff Is Bearable, But the U.S.-Korea Alliance Is at Stake"

Kim Jungkwan, Minister of Trade, Industry and Energy, is answering reporters' questions at a press briefing held at an undisclosed location in Sejong on the 16th. Photo by Ministry of Trade, Industry and Energy

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Amid ongoing unreasonable demands from the United States in tariff negotiations, some have even suggested that it might be better to simply accept a 25% tariff. However, Kim Jungkwan, Minister of Trade, Industry and Energy, expressed a cautious stance, stating, "This is an issue that will determine Korea's future, its alliance relationships, and its negotiating leverage."

At a press briefing held at an undisclosed location in Sejong on the 16th, Minister Kim emphasized, "While a tariff increase may seem bearable if you only look at the numbers, it would place a burden on the entire Korean industry. We need to make a strategic decision that will impact future generations."

He added, "The Trump administration applies pressure with the attitude that 'if you don't listen to us, you are not an ally,' rather than acting rationally. This is why it is difficult to approach the issue purely from an economic perspective."

Minister Kim also stated, "There are unreasonable aspects in the demands from the United States, and there are also unreasonable proposals in our own suggestions. I have raised my voice and even pounded the table during negotiations. Ultimately, it is through such processes that we find the final point of agreement."

Regarding the 350 billion dollar support structure, he explained, "Some people think the United States will take everything, but that's not the case. There are aspects that our companies can utilize as they enter the U.S. market or expand their local operations. Unlike Japan or the European Union, this is not a structure where we simply pay money and that's the end of it."

On Japan's 550 billion dollar agreement, he assessed it as "a strategy to secure a tariff advantage for the automobile industry first." Minister Kim noted, "The Japanese negotiation includes provisions that favor Japanese companies, and I understand that they have left open the option to break the agreement if it becomes disadvantageous. The European Union also entered into an agreement to secure a favorable position." He highlighted that Korea is pursuing a negotiation strategy that prioritizes long-term national interests and industrial linkages over short-term gains or losses.

The recent large-scale detention of Koreans in the state of Georgia was also discussed during the negotiations. Minister Kim said, "We raised this issue from the very first day of negotiations in the United States. The U.S. side was also caught off guard." He added, "Howard Lutnick, Secretary of Commerce, used the word 'FIX' and promised to resolve it quickly, and the Deputy Secretary of State also expressed regret." He further explained that "U.S. Immigration and Customs Enforcement is the toughest organization," indicating that the issue was also a source of embarrassment within the U.S. government.

Minister Kim also shared his views on organizational restructuring and energy policy. Regarding the separation of the Ministry of Trade, Industry and Energy and the Ministry of Climate, Energy and Environment, he expressed regret, saying, "Industry and energy are like brothers." On the construction of new nuclear power plants, he emphasized, "Building two new nuclear power plants and one small modular reactor (SMR) is inevitable when considering power demand after 2035. Even if there is a public debate process, these projects must ultimately move forward."

Regarding the unfair contract between Korea Hydro & Nuclear Power and Westinghouse, he said, "We are reviewing whether the contract complied with laws and regulations." Minister Kim added, "The Korean nuclear power industry has aimed for technological independence, but faces structural constraints due to Westinghouse's technology licensing fees and dependence on specific equipment. We must create the most favorable conditions possible so that domestic companies can thrive."

On restructuring in the petrochemical industry, he stated, "Companies are acting autonomously, and we will announce concrete results around October." He explained, "This is not just corporate restructuring, but an industrial restructuring effort," adding, "This is a joint initiative by the government, businesses, and the financial sector."

Minister Kim identified the 'Manufacturing Artificial Intelligence Transformation (MAX) Alliance' as a task as important as the tariff negotiations. He stressed, "If we do not achieve results with MAX, there is no future for our manufacturing industry. I will meet directly with companies at least twice a month to understand on-site challenges and resolve issues related to regulations, funding, and cooperation." He also mentioned that supporting AI transformation for small and micro businesses will be a decisive factor in manufacturing innovation.

Regarding electricity rates, he said, "I have not yet received a report on whether rates will be raised or frozen in the fourth quarter," declining to comment further. However, he noted, "Industrial electricity rates are 1.34 times higher than in China, and the gap with the United States is even greater. We must pay special attention to electricity rates to maintain industrial competitiveness."

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