U.S. places South Korea back on currency watchlist

The Trump administration is once again putting South Korea in its crosshairs — this time over currency.

The U.S. Treasury Department has redesignated South Korea as a country to monitor for its foreign exchange policies, a move likely to amplify pressure on Seoul as Washington sharpens its focus on exchange rates in trade negotiations. The designation, made public on June 5, comes amid the administration’s aggressive tariff-driven trade policy and signals that currency issues will remain front and center.

In its semiannual “Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States,” submitted to Congress, the Treasury listed South Korea among nine economies under monitoring. Others include China, Japan, Singapore, Taiwan, Vietnam, Germany, Ireland and Switzerland.

South Korea had been dropped from the watch list in November 2023 — its first removal in seven and a half years — but was placed back on it in November 2024, just before Trump returned to office. Ireland and Switzerland were newly added in this latest report, while the other seven were re-listings from last year.

Under the 2015 Trade Facilitation and Trade Enforcement Act, the Treasury reviews macroeconomic and exchange rate policies of the top 20 U.S. trading partners. Countries meeting two out of three criteria are designated for monitoring: a bilateral trade surplus with the United States exceeding $15 billion, a current account surplus above 3 percent of GDP and net foreign exchange purchases in at least eight of the past 12 months, totaling more than 2 percent of GDP.

While the designation does not trigger immediate penalties, it functions as a formal warning, signaling that the United States will be closely watching South Korea’s currency practices.

South Korea met two of the three thresholds — its large trade surplus with the United States and its current account surplus. Countries that meet all three are labeled “currency manipulators,” officially referred to as Enhanced Analysis Countries or countries for enhanced engagement, which is a more serious designation that can lead to direct restrictions such as limiting investments by U.S. firms.

Currency issues had already emerged as a flashpoint during the South Korea-U.S. “2+2” economic dialogue held in April, where Washington pushed for the matter to be included as a key agenda item. The renewed designation has raised concerns in Seoul that the United States may ramp up pressure for a stronger won.

In the report, the Treasury warned it will closely monitor developments that may give rise to significant currency misalignments, and pledged a more aggressive assessment of trading partners’ exchange rate policies to support the “America First” trade strategy.

“President Trump is committed to pursuing economic and trade policies that will spur an American revitalization marked by strong economic growth, the elimination of destructive trade deficits, and countering unfair trade practices,” the report read.

It specifically flagged instances where central banks intervene under the guise of stabilizing markets amid appreciation pressure, vowing tighter scrutiny.

The department also raised the possibility of recommending tariffs against countries found to engage in unfair currency practices.

BY KIM HYOUNG-GU   [yim.seunghye@joongang.co.kr]