Ahead of the tariff negotiations with the United States, Deputy Prime Minister for Economic Affairs Choi Sang-mok and Minister of Trade, Industry and Energy Anh Deok-geun are preparing for their visit to the U.S. Attention is focused on what negotiation cards our government will present. In a situation where it is difficult to reduce exports to the U.S., the reality is that increasing imports of U.S. products is a practical solution to balance the trade deficit.
Trade experts are focusing not only on the previously mentioned expansion of liquefied natural gas (LNG) imports and cooperation in the shipbuilding industry but also on U.S. high-tech weapons, which can significantly increase the import volume of top U.S. products, including crude oil, aircraft, and agricultural products.
Jeong In-kyu, head of the Ministry of Trade's trade negotiation headquarters, said during a meeting with ChosunBiz on the 16th, "The biggest concern is presenting a plan that can balance the trade deficit the U.S. claims." A Ministry official also noted, "Ahead of their visit to the U.S., we are reviewing various negotiation cards, including previously mentioned liquefied natural gas (LNG) and shipbuilding cooperation."
Trade experts are paying attention to expanding specific items among the top 10 U.S. import products. According to the Korea International Trade Association on the 20th, last year, South Korea's top 10 U.S. imported products (MTI Level 3) included ▲crude oil ▲semiconductor manufacturing equipment ▲LPG ▲aircraft and parts ▲semiconductors ▲natural gas ▲meat ▲pesticides and pharmaceuticals ▲automobiles ▲grain products. MTI is the classification system used by the Ministry of Trade, Industry and Energy.
Experts have identified aircraft as having a significant effect on improving the trade balance with the U.S. Aircraft are essential items that airlines must secure for operation, and importing U.S. aircraft could greatly reduce the trade surplus with the U.S.
In addition, given that the Chinese government is currently instructing its airlines not to purchase Boeing aircraft from the U.S., if our government raises aircraft purchases as a negotiation card, it is likely to be regarded as "a welcome proposal" by the U.S. Boeing is one of the few manufacturers in the U.S. and plays an important role in job creation within the country.
The expansion of imports of U.S. high-tech weapons is also mentioned as one of the negotiation cards. According to the 2024 World Defense Market Annual Report, the U.S. sold a total of $108.237 billion TIV (a measure based on the quantity and value of weapons) to other countries from 2014 to 2023. Among the countries purchasing U.S. weapons during this period, South Korea ($5.379 billion TIV) ranked 5th after Saudi Arabia, Australia, Japan, and Qatar.
Han Ah-reum, a researcher at the Korea International Trade Association, noted, "Other countries are also using the expansion of aircraft and high-tech weapon imports as negotiation cards," adding, "Due to their high unit prices, even introducing a few will significantly increase the import volume, which is effective."
Crude oil, currently one of the largest items among imports from the U.S., can also be utilized as a negotiation card. According to the Ministry of Trade, Industry and Energy and the Korea International Trade Association, among the 137 million tons of crude oil imported last year, 21.51 million tons were from the U.S., accounting for about 15.7%. In contrast, for LPG, the share of U.S. imports exceeds 90% of total imports, so there is limited potential for additional expansion.
Kim Tae-hwan, head of the Oil Policy Research Division at the Korea Energy Economics Institute, said, "Crude oil is a product purchased by private corporations, so it is difficult for the government to make direct decisions, but it is possible to induce purchases through policy and financial support," adding, "For example, if the government supports transportation costs for purchasing U.S. crude oil, this could lead to an increase in private corporations' imports."
Some experts have suggested expanding imports of agricultural products. Currently, meat ranks 8th and grain products rank 11th among imports from the U.S. The U.S. has raised issues regarding Korea's non-tariff barriers on beef imports and has criticized Korea for imposing high tariffs on U.S. rice.
Kim Hyuk-jung, a deputy researcher at the North America and Europe team of the Korea Institute for International Economic Policy, said, "It is also a method to consider relaxing the age limit on beef, which the U.S. has been consistently pointing out, or expanding imports of grains such as rice, which still have tariffs under the Korea-U.S. Free Trade Agreement (FTA)."