China, Japan, South Korea Boost Trade Ties, as US Tariffs Loom

After years of aggressive security posturing against neighbouring states allied with the US, China has announced it’s eager for greater trade with South Korea and Japan.

America’s close allies, sustained by tight security ties with the US, rebuffed Beijing’s approaches for years. But now – just 10 weeks into Trump’s second term in office, they are looking much more open to such a move.

Trade ministers from three countries – Asia’s biggest economies – met in Seoul on Sunday for the first economic talks in five years to discuss greater regional trade three days before Trump unveils tariffs that could add to the erosion of Japan and Korea’s significant car sales in the US, by hitting a range of other export sectors.

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The countries’ three trade ministers agreed to “closely cooperate for a comprehensive and high-level” talks on a South Korea-Japan-China free trade agreement deal to promote “regional and global trade”, according to a statement released after the meeting.

“It is necessary to strengthen the implementation of RCEP, in which all three countries have participated, and to create a framework for expanding trade cooperation among the three countries through Korea-China-Japan FTA negotiations,” South Korean Trade Minister Ahn Duk-geun said, referring to the Regional Comprehensive Economic Partnership.

The ministers met ahead of Trump’s announcement on Wednesday of more tariffs in what he calls “liberation day”, as he upends Washington’s trading partnerships.

Seoul, Beijing and Tokyo are major US trading partners, but have been at loggerheads among themselves over issues including territorial disputes and Japan’s release of wastewater from the wrecked Fukushima nuclear power plant.

They have not made substantial progress on a trilateral free-trade deal since starting talks in 2012.

RCEP, which went into force in 2022, is a trade framework among 15 Asia-Pacific countries aimed at lowering trade barriers.

Car tariffs seen hitting Seoul, Tokyo

Trump announced 25% import tariffs on cars and auto parts last week, a move that may hurt companies, especially Asian automakers, which are among the largest vehicle exporters to the US. Japanese auto exports total about $40 billion and represent over a quart of the country’s exports to the US.

While Toyota and some other big carmakers look likely to set up car plants in the US, overall production could plunge by 4% at home, by some estimates.

South Korea is the second largest exporter of vehicles to the United States, behind Mexico, and its auto exports to the US total close to $35 billion, nearly half of its total US exports.

Japan, meanwhile, is the third largest exporter of vehicles to the US, according to data from S&P, Reuters said.

Both countries have been forced to rethink and rejig their trade dealings because of US President Donald Trump’s zealous imposition of tariffs and apparent lack of empathy.

He told NBC News last week he “couldn’t care less” if tariffs cause car prices to go up, and has reportedly set his eyes on targeting chips next.

US now seen as unpredictable, unreliable

Motives bigger and potentially more serious than economic factors appear to be warming the frosty ties in North Asia.

All three countries have been shaken by the new US leadership, which appears to be extremely unpredictable, for foes and allies alike, and potentially far more unreliable than the tight ties they had with the Biden Administration.

Investors are unimpressed and have been ditching US shares in a rush to gold and other “safe havens”.

Japan’s political elite is allegedly divided, fearing Trump’s policies will create even deeper economic and social problems in America, according to a commentary by Asia Sentinel.

And analysts say it’s hardly surprising that South Korea and Japan are looking in other directions, to seek economic alternatives to the US.

China appears to be hoping for a trade deal with Trump, but closer trade ties with Tokyo and Seoul may offer a safety net if President Xi cannot achieve that.

The outcome from Sunday’s talks was an agreement to hold their next ministerial meeting in Japan. Much hinges on the ‘reciprocal tariffs’ Trump will unveil on Tuesday.