South Korea May Consider More US Food Imports to Placate Trump

(Bloomberg) -- South Korea may consider a plan to increase US food imports to help reduce the trade imbalance between the two countries should it emerge as a point of tension with Donald Trump’s incoming administration, according to people familiar with the matter.

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The idea is part of contingency plans Seoul has been crafting as it prepares for Trump’s return to the White House next week. During his election campaign, Trump vowed to narrow trade deficits with other countries through tariffs, particularly targeting China. South Korea ranks eighth among economies holding the biggest trade surpluses with the US.

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South Korea relies heavily on food and energy imports to sustain its 52 million population and is a key buyer of US agricultural products such as beef, wheat, corn and fruit. The US is the nation’s biggest overseas supplier of food items.

Seoul is already considering a plan to raise imports of US oil and gas should Trump increase pressure on trading partners, Bloomberg News reported in November.

Any increase in agricultural imports would be limited in size compared with any ramped-up energy purchases because the scale of food purchases is smaller, the people said. The government is also wary of possible opposition from local interest groups including farmers, they said. South Korea already has some restrictions on meat imports, buying only US beef derived from animals less than 30 months old.

South Korea’s Trade Ministry said it has not discussed expanding US agricultural imports.

The Ministry of Agriculture, Food and Rural Affairs said in a separate statement that South Korea is “not considering the expansion of the import of agri-food products from the US.”

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“Currently, the new administration has not announced a detailed trade policy in the field of agriculture, and thus there is uncertainty,” the ministry said, referring to Trump’s incoming government. “However, the MAFRA is discussing possible responses, in diverse ways, to cope with the situations that may take place with the inauguration of the new administration of the US.”

Trump comes into office for his second term just as South Korea’s government is undergoing its biggest turmoil in years. South Korean President Yoon Suk Yeol was suspended from power by parliament in December for his brief imposition of martial law and was arrested on Wednesday. Finance Minister Choi Sang-mok is serving as the nation’s second acting president since then, after the first stand-in leader was also impeached.

Discussion of contingency plans is an indication that policymakers in Seoul are keen to prevent the political instability putting South Korea on the back foot in dealing with the Trump administration. In a sign of efforts to shore up the trade relationship with the US ahead of Trump’s return, Trade, Industry and Energy Minister Ahn Duk-geun visited the US last week to meet with policymakers.

Ahn said this week that South Korea was weighing buying more US oil and gas to diversify its energy sources and potentially head off the threat of Trump’s proposed tariffs.

For agricultural imports, the government could expedite talks on certain pending imports or temporarily reduce or suspend duties to encourage greater purchases, the people said.

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South Korea is now the sixth largest destination for US exports of agricultural products since a free trade deal took effect in 2012. South Korea is also a top importer of US beef after public fears eased over potential mad-cow infections in the late 2000s, according to the US Department of Agriculture.

Tariffs envisioned by Trump pose a key concern for South Korean policymakers as they could hurt trade ties that have strengthened over the years as Washington realigns global supply chains away from China and strengthens its technology cooperation with Seoul.

While China remains South Korea’s largest trade partner and its biggest market, the US comes a close second as an export destination with the gap narrowing markedly in recent years.

South Korean companies play an integral role in technology that the US relies on, including memory semiconductors, automobiles and rechargeable batteries. The security alliance between the two countries is also a foundation on which Washington and Seoul are dealing with North Korea as it develops nuclear arms while aiding Russia’s war on Ukraine.

Trump is set to take office on Jan. 20 and has yet to make comments specifically touching on the trade imbalance with South Korea or the political turbulence surrounding Yoon. During his campaign, he referred to South Korea as a “money machine” that should shoulder more of the upkeep for American troops stationed in the country.

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