MICHEL MARTIN, HOST:
Officials from both Japan and South Korea are in Washington, D.C. this week for trade negotiations. NPR's Anthony Kuhn reports from Seoul on how South Korea, an Asian ally and export powerhouse, is coping with tariffs.
(SOUNDBITE OF MACHINERY WHIRRING)
ANTHONY KUHN, BYLINE: A machine cuts rolled sheets of aluminum into two-inch strips. The GJ Aluminum company in Hwaseong city, just south of Seoul, exports these products for use in air conditioners, electric transformers and other equipment. GJ's CEO, Yoo Kyung-yeon, says that the Trump administration's 25% tariffs on all aluminum and steel imports hit his firm just as it was investing in a new factory to make aluminum to sell to the U.S.
YOO KYUNG-YEON: (Through interpreter) We were in the process of making a deal with the U.S. for about $5 million, but this problem suddenly emerged and our clients stopped the deal. We feel quite helpless.
KUHN: Yoo says the tariffs mean his company's products are no longer competitively priced. South Korea's government, meanwhile, has pledged more than $254 billion to assist exporters, including help in diversifying away from the U.S. market.
YANG HYANG-JA: (Through interpreter) I think the anxiety and the feeling of unfairness is growing among South Korean companies.
KUHN: Yang Hyang-ja is a politician and former executive with Samsung. She says that South Korean companies are happy to invest in the U.S. if it offers a good business environment.
YANG: (Through interpreter) What I fear most is that Trump says one thing in the morning and another in the evening. This can cause companies to suffer greatly or run into unexpected difficulties.
KUHN: Under the Biden administration's friendshoring policy, South Korean companies invested billions of dollars in the U.S. in states including Alabama, Texas and Georgia, making semiconductors and electric vehicles. The U.S. competes with China in these high-tech sectors, and it offered incentives to entice foreign investors and offset higher U.S. labor costs. But President Trump wants to cancel the subsidies just as South Korean firms are gearing up for production.
YEO HAN-KOO: So now they are in the process of building state-of-the-art facilities.
KUHN: Yeo Han-koo is a senior fellow at the nonpartisan Peterson Institute for International Economics in Washington, D.C. and a former South Korean trade minister.
YEO: But then all this government support kind of disappear or radically change. Then I think they really have problem in operationalizing the manufacturing facility and make their manufacturing successful in the U.S.
KUHN: Yeo says that despite South Korea's advanced technologies, its economy is far smaller than the U.S.' and it depends on its alliance with the U.S. for security.
YEO: I think, basically, Korean companies are price-taker, not price-setter.
KUHN: So instead of protesting the new policies, he says, they must instead focus on adapting to them.
Lee Seungjoo is a professor of political science and international relations at Chung-Ang University in Seoul.
LEE SEUNGJOO: (Through interpreter) The bigger goal of the Trump administration is not to pressure its allies, but to figure out how to deal with China and contain it. Which countries are essential to the U.S. to achieve this goal? South Korea is one of them.
KUHN: He says that where U.S. and South Korean interests dovetail, there will be economic opportunities. South Korean officials will try to reach a deal with Washington before U.S. tariffs kick back in in July.
Anthony Kuhn, NPR News, Seoul.
(SOUNDBITE OF SIX ORGANS OF ADMITTANCE'S "ELK RIVER") Transcript provided by NPR, Copyright NPR.
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