Trump's direct hit and the South Korean government's refusal, US-Korea trade agreement fails. Digital regulation as a detonator, only distrust remains. Hankyoreh graphic

Trump warns of "retaliation targets," directly hitting Korea

On August 26, U.S. President Donald Trump posted on his social media platform 'Truth Social.' He warned, "Any digital taxes, laws, and regulations targeting American companies will be subject to retaliation." He added, "If not withdrawn, the United States will impose significant tariffs on that country's exports to the U.S. and implement restrictions on advanced technology exports."

While seemingly aimed at the European Union's (EU) Digital Markets Act (DMA) on the surface, South Korea was the actual primary target. Politico, a U.S. political news outlet, reported on September 3, "Trump's threat was primarily a response to tech-focused legislation under review in the South Korean National Assembly, such as the online platform regulation bill." It further analyzed, "This issue complicated the fine-tuning of the preliminary trade agreement reached by South Korea and the U.S. in July, ultimately becoming one of the reasons for the agreement's failure."

South Korea's refusal of joint statement leads to breakdown in negotiations

In late July, South Korea and the U.S. reached a preliminary trade agreement, focusing on $350 billion in investment and $100 billion in energy purchases. However, problems emerged during the subsequent coordination of the joint statement. Politico reported, "The Trump administration pressured the South Korean government to sign a joint statement that included a clause abandoning digital trade restrictions, but the Lee Jae-myung administration refused."

This background explains the context immediately following Trump's remarks. He characterized South Korea's legislative push as a challenge to the international trade system, stating, "Digital regulations provide a pass for Chinese companies while discriminating against American companies."

U.S. conservative camp's fierce criticism: "A gift to China, shackles on America"

The conservative camp in the U.S. also raised their voices in unison. Conservative commentator Charlie Kirk pointed out on X (formerly Twitter), "South Korea regulates only American companies while giving Chinese companies free passage." Former White House National Security Advisor Robert O'Brien warned, "South Korea's digital regulations are a gift to the Chinese government."

Notably, about 40 Republican lawmakers issued a joint letter urging that "South Korea's actions disproportionately target American companies" and must be resolved in trade negotiations. Representatives Adrian Smith and Carol Miller stated in a joint press release, "President Trump is an outstanding negotiator and will secure fair market access for American digital companies."

The China variable and domestic controversy

The point emphasized by Trump and the U.S. conservative camp was the "Chinese exemption." While the online platform regulation bill promoted by the South Korean Fair Trade Commission is applied equally to global businesses, given the limited market share of Chinese companies in South Korea, the regulatory effect is effectively concentrated on U.S. Big Tech. Consequently, the U.S. side is protesting, saying, "It's a regulation that bypasses China and only hits America."

Controversy is also raging within South Korea. The industry expressed concern that "government control over market autonomy stifles innovation," and startups warned of "a chilling effect on global investment." Consumer groups also pointed out, "It is a dangerous attempt by the administration to control public opinion and the flow of information." Conflict has also erupted in the political sphere. The Democratic Party defended it as "the minimum necessary measure for the protection of small business owners and consumers," while the People Power Party countered that it is "the government's censorship law."

Our newspaper's preemptive analysis and conclusion

The article "[Kim Young's US-Korea Column] Lee Jae-myung's Mask Torn by Trump," published on August 27, preemptively analyzed this trend. At the time, the column directly criticized, "The online platform regulation bill by the Lee Jae-myung administration's Fair Trade Commission mimics the EU's Digital Markets Act, and its actual purpose is not the protection of small business owners but the concentration of power." It further pointed out, "It creates a structure where the government can intervene in Naver's search, KakaoTalk's exposure, and Coupang's display methods," and warned, "This regulation will ultimately hinder the US-Korea agreement and lead to international conflict."

This Politico report confirmed that the diagnosis has become a reality. Domestically, regulations presented as "fairness" are hindering innovation and industrial competitiveness, while internationally, they are simultaneously provoking U.S. pressure and controversy over bias towards China.

Ultimately, the failure of the U.S.-Korea trade agreement is rooted in the reality of the government's power strategy clashing with international pressure. The policy pursued under the guise of digital regulation is returning as a double boomerang of industrial stagnation and diplomatic isolation.

Trump's warning was an event that stripped away the South Korean government's pretense of 'fair economy' on the international stage.

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