Opinion Tariff Tracker, May 26: After EU reprieve, will South Korea secure a deal with the US?

In a social media post, he said he had spoken to European Commission President Ursula von der Leyen, who had requested an extension of the June 1 deadline he imposed on Friday. In a separate social post, von der Leyen wrote that the two leaders had a “good call,” and that Europe was “ready to advance talks swiftly and decisively.”

Reprieve for EU with talks ahead

On Friday (May 23), Trump announced he would impose 50% tariffs on imports from the EU, effective June 1, signalling his impatience with the pace of the talks. This builds on his animosity towards the bloc, a longtime ally of the US. His tariff threat sent markets spiralling downward on fears of an escalating trade war.

According to a report by The New York Times, European officials had submitted a term sheet with details of their offers towards a trade deal with the US. This included mutually ending tariffs on industrial goods, a commitment to increase purchases of US fuel, and seeking reduced tariffs on European goods, specifically on cars and pharma. The Trump administration has taken issue with EU policies it cites as discriminating against US businesses, including the European value-added tax.

The US is the EU’s largest trading partner, accounting for 20% of its goods exports last year. Data from the Office of the US Trade Representative (USTR) revealed that the US ran a $235.6 billion trade deficit with the EU in 2024, a 12.9% increase over the previous year.

The European Commission estimates that American tariffs would impact around 70% of the bloc’s goods trade with the US. As things stand, the EU already faces 25% tariffs on exports of automobiles and metals, as well as 10% retaliatory tariffs on all non-goods exports, slated to increase to 20% from July 8.

Overall tariffs on the EU could increase to 97%, following the Section 232 investigations opened by the White House into pharmaceuticals, semiconductors, critical minerals, and trucks.

Should all talks fail and Trump’s tariffs become effective, the EU is set to unfurl countermeasures worth €21 billion. These would impact US exports of maize, wheat, motorcycles and clothing. A separate set of tariffs targets €95 billion of items, including Boeing aircraft, cars and bourbon whiskey, excluded from the earlier list.

South Korea next in the firing line?

The US has reportedly asked South Korea, its long-time ally with which it enjoys a Free Trade Agreement, to resolve the trade imbalance in commodities between both countries, Reuters reported on Monday. USTR data reveals that the US ran a $66 billion trade deficit with South Korea in 2024, a 29.2% increase over 2023.

According to the report, the two countries entered technical consultations in Washington last week to discuss tariff and non-tariff measures flagged in the USTR’s 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers. Among other things, the NTE Report took note of the Korean import ban on American beef from cattle aged over 30 months, emissions regulations on imported cars and pharma pricing policies.

The US and South Korea also reportedly engaged in discussions on economic security and goods origins. In the past, Trump has threatened to withdraw some American troops from South Korea, which would expose it to threats from North Korea. South Korea is dependent on nuclear deterrence from the US, with interim President Han Duck-soo describing the support of the US as “absolutely critical for us” to The Economist.

The two countries have engaged in talks since Trump announced the ‘Liberation Day’ tariffs in April, with a view to finalising a trade deal. South Korea currently faces 25% ‘reciprocal’ tariffs on its exports, and continues to push for tariff exemptions. It will also be affected by the 25% tariffs on automobiles and metals.

The IMF reduced South Korea’s growth forecast to 1% following the tariff announcements, while Trump’s Korea tariffs violate several terms of the US-Korea FTA in place since 2012. Trump claims that South Korea tariffs American goods by 50%, which the South Korean government has refuted, saying the average tariff rate on US imports under the FTA is less than 1%.

Last week, poll-bound South Korea announced a round of support measures for its key export industries of biopharmaceuticals and automotives against Trump’s tariffs.