Concerns are being raised in the business community regarding President Lee Jae-myung's decision not to attend the North Atlantic Treaty Organization (NATO) summit in the Netherlands on 24th and 25th. Export corporations had anticipated that South Korea and the United States would communicate closely at the NATO summit ahead of the expiration of the U.S. mutual tariff exemption scheduled for 8th of next month, but this expectation has faded due to President Lee's absence.

NATO is a military alliance consisting of 32 countries from the United States, Canada, and Europe, but it has invited South Korea, Japan, Australia, and New Zealand to its summit every year since Russia's invasion of Ukraine in 2022. Former President Yoon Suk-yeol attended the NATO summit for three consecutive years.

President Lee Jae-myung is making a phone call with U.S. President Donald Trump at the official residence in Hannam-dong, Seoul on the 6th. /Courtesy of Yonhap News

Initially, there were many expectations in the political and business sectors that President Lee would also attend the NATO summit, as there was only about two weeks left until the U.S.-imposed mutual tariff exemption deadline.

President Lee attended the G7 summit held in Canada on the 15th, aiming to discuss key issues such as trade with U.S. President Donald Trump. However, at that time, President Trump returned early due to the conflict between Israel and Iran, causing the South Korea-U.S. summit to be canceled.

Export corporations appear worried that the high tariffs might be imposed by the United States. President Trump announced on April 2nd that he would impose mutual tariffs on major trading partners. The tariff rate applicable to Korea is 25%, making it the 13th highest among the 25 countries announced at that time. The U.S. decided to postpone this measure for 90 days. If implemented as planned, tariffs will be imposed starting from 8th of next month.

The automotive and steel industries are anxiously awaiting dialogue between the leaders of South Korea and the United States. While the automotive and steel tariffs are not mutual tariffs but product-specific tariffs, there is a possibility that the rates or export volumes could be adjusted based on negotiations. The Trump administration has imposed tariffs of up to 25% on automobiles and 50% on steel and aluminum.

The United Kingdom, which was the first among major trading partners to conclude tariff negotiations with the United States, succeeded in lowering the product-specific tariff on automobiles from 27.5% to 10% for a limit of 100,000 units annually. According to the U.S. Department of Commerce, a total of 96,451 British-made automobiles were exported to the U.S. last year. This effectively reduced the tariff burden on the entire volume of automotive exports to the U.S.

A vehicle is waiting at the export shipping dock of Hyundai Motor's Ulsan plant. /Courtesy of Hyundai Motor

Since the implementation of the U.S. import car tariff measures started in April, Korea's exports to the U.S. have significantly decreased. According to the Ministry of Trade, Industry and Energy, last month's export value of automobiles to the U.S. was $2.516 billion, down 27.1% compared to the same month last year. Hyundai Motor and Kia primarily manufacture most of their hybrid cars at their Ulsan plant for export to the U.S. General Motors (GM) also produces compact sports utility vehicles (SUVs) in Korea.

A business representative noted, "Looking at the case of the United Kingdom, it is highly likely that tariff negotiations with the United States will proceed in a 'top-down' manner, where rates and trade conditions are adjusted based on the conclusions reached in the summit, and as the meeting with President Trump is delayed, the impact on domestic export corporations will only worsen."

After President Lee's decision to not attend, it has been reported that Japan is also considering not attending this NATO summit. Japanese NHK reported the day before that, "Due to the heightened tensions in the Middle East following the U.S. attack on Iran's nuclear facilities, the government is discussing deferring Prime Minister Shigeru Ishiba's attendance at the NATO summit, sending Foreign Minister Takeshi Iwaya as a representative instead."