U.S. Expert: “For South Korea, a 25% Tariff Is Better Than 15% Plus $350 Billion”
- Seoyeon Kim
- Sep 17
- 2 min read
Sep 17, 2025
Seoyeon Kim
Dean Baker, senior economist at the Center for Economic and Policy Research (CEPR), argues that rather than paying Trump’s administration both a reduced tariff and a massive investment fund, South Korea and Japan should simply accept higher tariffs and redirect money to domestic industries.
South Korea would be better off paying a 25% tariff than agreeing to a 15% tariff plus a $350 billion payment to the U.S., according to Dean Baker, senior economist at CEPR. In an interview with this newspaper on the 15th, Baker said, “Trump’s 25% tariff will certainly hurt Korea’s economy. But it would be less damaging than paying both a 15% tariff and $350 billion at the same time.”
To put the figure in perspective, $350 billion is about 84% of South Korea’s total foreign reserves.
Security Concerns and U.S. Reliability
Baker warned against expecting reliable security guarantees from Trump in return for such payments, “If Korean and Japanese leaders think Trump will protect them from China or North Korea, that’s madness. Trump has been very clear, he acts in his own interest and doesn’t feel bound by past security commitments.”
Trade Impact Estimates
Baker explained his economic reasoning: First, a 15% tariff could reduce Korean exports to the U.S. by about 5% (from $132 billion to $125 billion). Second, a 25% tariff could push exports down another 10%, costing an additional $12.5 billion. Third, paying $350 billion to protect $12.5 billion in trade, he said, makes little economic sense.
Japan’s Deal with Trump
While Japan has already agreed to invest $550 billion in exchange for tariff reductions, Baker said this was largely driven by security concerns with China. Economically, however, he argued Japan would have been better off simply paying the tariffs, warning, “Trump is not a reliable negotiating partner. Even after making a deal, he always finds reasons to demand more.”
Trump’s Global Approach
Baker also noted Trump’s warm personal ties with leaders like Kim Jong-un, Vladimir Putin, and Xi Jinping, saying there is no evidence these relationships made their countries behave more responsibly. Instead, Kim expanded his nuclear arsenal and Putin invaded Ukraine.
ICE Raids and Negotiation Leverage
Recent ICE raids at Hyundai and LG plants in Georgia shocked Koreans, but Baker warned that such actions could easily happen again, “ICE operates with little accountability. Korea should assume these raids are always possible, regardless of any promises.”
Legal and Political Outlook
Baker said the U.S. Supreme Court may eventually limit Trump’s tariff powers but is unlikely to overturn them completely. He also noted that Trump, or another Republican successor, could maintain similar trade policies even after 2029.
Final Assessment
In Baker’s view, South Korea should avoid handing over billions to Trump’s administration, “The 25% tariff will be painful, but almost certainly less damaging than paying both a 15% tariff and $350 billion. And even if Seoul agrees, there is nothing to stop Trump from raising tariffs again later. Deals with Trump are not worth much.”
