Trump's Tariffs Could Drive Japan and South Korea Closer to China

Despite recent US efforts to strengthen Indo-Pacific alliances, Washington's tariffs may drive Tokyo and Seoul towards closer economic ties with China

Washington's abrupt pivot from championing Japan and South Korea as essential Indo-Pacific allies to slapping them with steep tariffs has not only rattled markets - it risks nudging both nations closer to economic alignment with China .

Last week, the United States emphasised the importance of the US-Japan alliance for securing a "free and open Indo-Pacific ".

Washington called Japan an "indispensable partner in deterring communist Chinese military aggression", and announced that it would upgrade the US military command in Japan to a new "war-fighting headquarters".

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However, this week, the US imposed a 24 per cent levy on Japanese goods, driving the Nikkei share average to an eight-month low on Thursday.

Japan's Trade Minister Yoji Muto called the tariffs "extremely regrettable", and said Tokyo would seek an exemption while evaluating their effects on the domestic economy and "do our best to take necessary steps".

South Korea, another important Asian security ally, was slapped with an equally hefty 25 per cent tariff.

The move came just days after the revelation of an alleged secret Pentagon memo aimed at deterring mainland China from seizing Taiwan .

In this context, the memo proposed a shift in the primary mission of 28,500 US Forces Korea troops, redirecting their focus from countering threats from North Korea to addressing the growing concerns posed by China.

As a result of the tariffs , South Korea’s main KOSPI stock index dropped by 2.7 percent, reaching a three-month low during early trading on Thursday. In reaction, South Korea's acting President Han Duck-soo sought talks with Washington and issued orders for urgent assistance to companies.

The duties levied on America’s closest security partners and the ensuing trade conflict may push these nations towards stronger economic ties with Beijing.

During the weekend, an intergovernmental gathering involving economic ministers from China, Japan, and South Korea was held. It was reported that they reached an agreement to jointly address the issue of US-imposed tariffs, particularly as China faces a significant 34 percent tariff.

Japan and South Korea aim to import semiconductor raw materials from China, whereas Beijing aims to buy semiconductor products from nearby countries, as reported according to a social media account affiliated with Chinese state broadcaster CCTV .

All three sides also agreed to strengthen supply chain cooperation, engage in more dialogue on export controls and deepen collaboration in the digital and green economies, the Xinhua News Agency reported.

The three East Asian countries also agreed to resume negotiations on a trilateral free trade agreement (FTA) that has been on hold since 2019, according to South Korea's Ministry of Trade, Industry and Energy.

The move came amid Tokyo's recent efforts to reduce its economic dependence on China, including banning Huawei Technologies from domestic networks and restricting exports of semiconductor manufacturing equipment to China.

South Korea has also been working to decrease its reliance on Chinese imports for key materials, aiming to bring that figure down from 70 per cent to below 50 per cent by 2030.

While these changes are not irreversible, they could be influenced by the potential benefits of the FTA that China is offering.

The advantages of the "high-level" FTA included less trade protectionism, improved competitiveness, stronger supply chain resilience, and growth opportunities in emerging industries, according to China's nationalistic tabloid, The Global Times.

"The China-Japan-South Korea FTA is poised to further facilitate the creation of a vast consumer market among these three nations, whose combined GDP reportedly accounts for around 25 per cent of the global economy," the tabloid added.

While Japan and South Korea are likely to tread cautiously on closer economic integration with China, it is up to the US to clarify whether these tariffs will be a permanent fixture of the Donald Trump administration .

Furthermore, if Washington anticipates that Tokyo and Seoul will act as enduring pillars of security against China’s growing influence, it needs to establish a more distinct line between reliable allies and simple economic partners.

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