Last-minute U.S. withdrawal from tariff talks throws South Korea into disarray

WASHINGTON — Just two days before a high-level “2+2” economic and trade dialogue, the United States abruptly canceled the meeting, throwing Korea’s negotiation strategy into disarray with the Aug. 1 tariff deadline looming.

U.S. Treasury Secretary Scott Bessent pulled out of the scheduled July 25 meeting, citing “urgent circumstances,” but offered no details — nor a new date — prompting speculation in Seoul that Washington may be leveraging the delay to gain ground in ongoing tariff talks.

As a result, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol turned back from Incheon International Airport where he had been waiting to depart.

No ‘hidden meaning’ behind cancellation

Following the cancellation, Korea’s Embassy in Washington held an emergency meeting. Afterward, the embassy stated, “The schedule was canceled due to Bessent’s urgent circumstances,” and emphasized, “It is difficult to see any deeper meaning related to negotiations with Korea.”

Still, officials expressed discomfort. It was an extremely unusual situation: An official bilateral meeting confirmed by both sides was canceled with no explanation just two days before the scheduled date, and without any alternative timetable being discussed.

“Frankly, I don’t know what could be more important than negotiations with Korea,” said a member of the negotiating team. “We’ll find out what Bessent ends up doing on July 25.”

‘Mandated terms have been conveyed’

Some speculate that after finalizing a deal with Japan on July 22, Washington may be attempting to delay talks with South Korea — either to reject Korea’s terms or to gain a more favorable position.

“After the first round of visits to Washington by Trade Minister Yeo Han-koo and National Security Office Director Wi Sung-lac, Korea had already confirmed most of the U.S. demands,” said a government source. “This time, the negotiation team was proceeding with terms backed by a government mandate.”

That mandate was already conveyed to Bessent, the source added.

“It’s unclear whether Korea’s proposal has been reported to President Donald Trump,” said another source. “If the United States canceled the meeting to reject the proposal, that is likely not a decision Bessent could make on his own.”

Did Japan’s concessions become the benchmark?

While Korean officials declined to discuss the details of their negotiation proposal, they were visibly sensitive to the optics of Japan offering market access for rice in exchange for reduced tariffs on automobiles and making a $550 billion investment pledge, which had previously been set as a “red line” that could not be crossed since the strategy-making stage.

“Honestly, we didn’t expect Japan to wrap up negotiations first,” said a diplomatic source. “Their concessions on sensitive issues like rice, along with their investment commitment, may have become a de facto guideline for South Korea.”

Bloomberg reported on July 23 that Korea is negotiating to establish a joint investment fund with Washington, with U.S. officials allegedly asking for a pledge in the tens of billions. Another report said Commerce Secretary Howard Lutnick has floated a $400 billion target — matching Japan’s initial figure before Trump unilaterally raised it to $500 billion and secured a final $550 billion.

Trump famously increased Japan’s investment target by hand from $400 billion to $500 billion during the talks, with the final figure reaching $550 billion.

Talks stall as U.S. officials depart 

Adding to Korea’s urgency, U.S. negotiators are preparing to leave Washington. Trump is set to visit his golf courses in Scotland from July 25 to July 29. While the trip is officially for follow-up discussions with Britain, both sites host Trump-owned golf courses, raising speculations of a golf retreat.

Lutnick is expected to accompany the president. Some speculate that Bessent’s “urgent schedule” may involve this trip, though nothing has been confirmed.

Even if unrelated to Scotland, Bessent is set to leave soon anyway for a negotiation with China in Stockholm, Sweden, from Monday to Tuesday. That trip would likely require a weekend departure from the United States due to the time difference.

U.S. Trade Representative Jamieson Greer is expected to attend that meeting as well, leaving no negotiators stateside.

Negotiations after 25 percent tariff already in place

With all key U.S. negotiators leaving, Korea may be forced to continue negotiations after Aug. 1, when a 25 percent tariff could already be imposed on Korean exports.

Minister of Industry Kim Jung-kwan and Yeo are scheduled to meet with Lutnick and Greer on Friday, but the meetings are unlikely to serve as the final round of talks.

Wi, who had traveled to the United States for a broader “package deal” involving security issues, returned to Korea on Wednesday without notable progress.

“It’s difficult to predict how negotiations will wrap up without a confirmed meeting date,” said a government official. “Didn’t Trump say he would leave the door open for talks even after Aug. 1?”

Still, if Japan receives a 15 percent tariff on goods and autos, while Korea alone faces a 25 percent tariff, the impact on Korean exporters could be severe, weakening the government’s negotiating leverage and pressuring it into time-sensitive talks.

BY KANG TAE-HWA [lim.jeongwon@joongang.co.kr]