Dean Baker criticized the investment agreements made by South Korea and Japan, but his figures and rationale were weak. (Composite: Korea-US-Japan Daily)

Dean Baker is a prominent progressive economist in the United States who has consistently criticized free trade and intellectual property systems. However, in this latest column, his analysis lacks figures and rigorous modeling, leaving behind only political rhetoric.

He argued that Japan and South Korea are essentially offering massive sums to President Trump in exchange for tariff relief, but his claims completely fail to account for the actual structure of the agreements, international norms, and trade data.

Domestic experts also point out that his claims are unrealistic. Nevertheless, there is suspicion that the Korean media has sensationalized his remarks to help shape public opinion in a way that alleviates the government's burden regarding trade negotiations.

"Don't give money to Trump"

Dean Baker is the co-founder and senior economist of the Center for Economic and Policy Research (CEPR) in the U.S. He has consistently advocated for stronger financial regulations, the expansion of social welfare, and criticism of free trade, often classified as a radical leftist within the American landscape. Yet, this recent column reads more like a politician’s speech than an economist’s analysis. Figures and models have disappeared, replaced solely by political rhetoric.

Baker claimed that Japan and South Korea are handing over $550 billion and $350 billion, respectively, to President Trump to receive tariff cuts. He added, "It would be better to provide that money directly to exporters and workers."

However, Japan has already signed a Memorandum of Understanding (MOU) with the U.S. to lower automobile tariffs from 25% to 15%, and the investment pledges are structured as loan and guarantee limits from institutions like the Japan Bank for International Cooperation (JBIC). According to the Japanese government, the actual execution amount is likely to be only a few billion dollars. His description of a "blank check" is far from the truth.

In the case of South Korea, $350 billion is merely a "maximum limit" spread across a multi-year investment and financial support plan. While this is a massive sum, amounting to 83% of South Korea’s foreign exchange reserves (approximately $420 billion as of July 2025), the actual structure of implementation is far more limited. A simple comparison distorts the reality.

His alternative carries even greater flaws.

Baker suggested providing direct support to exporters and workers, but this constitutes an export-linked subsidy that is explicitly prohibited by the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures.

In fact, rulings have been made against such practices in cases like the Canadian renewable energy dispute and the EU aircraft subsidy dispute; South Korea itself has had experience with WTO disputes with the EU over shipbuilding subsidies. Baker's alternative is a dangerous prescription that would drag South Korea back into the arena of international litigation.

His numerical estimates are also unsubstantiated.

He claimed that if tariffs rise to 25%, South Korea's exports to the U.S. would decrease by $12.5 billion annually. However, studies by the National Bureau of Economic Research (NBER) and the U.S. Federal Reserve during the U.S.-China trade war of 2018–2019 showed that over 90% of the burden of Trump's tariffs was passed on to U.S. importers and consumers.

The decline in Chinese exports was limited to only 2–6% by item, and overall export volumes were maintained through transshipment. Baker’s estimates are closer to political slogans than economic modeling.

He also ignored the investment effects within the United States.

Samsung Electronics is investing over $20 billion in Taylor, Texas, and SK Hynix is investing several billion dollars; in the process, they are utilizing subsidies and tax credits from the Inflation Reduction Act (IRA) and the CHIPS Act. These investments are not simple expenditures but strategic assets with long-term recovery potential.

The security context is also missing.

Under the ROK-U.S. alliance, South Korea spends approximately 1 trillion won annually on defense cost-sharing. This is not merely a cost, but an investment in security assets. Baker’s failure to account for this while calculating only economic profit and loss demonstrates a prescription made without understanding South Korea's reality.

Nevertheless, the Korean media cited his column to suggest that "even foreign experts see Trump's demands as foolish." Sensational headlines like "Better to just accept the tariffs" and "No need to give money to Trump" were poured out, yet the flaws and legal constraints of his arguments were barely mentioned. It is difficult to escape the criticism that this was an unverified reproduction of information.

Dean Baker’s recent column is closer to a political slogan reflecting leftist ideology than a scholarly analysis. He reached his conclusions using simple proportional calculations while ignoring the structure of the U.S.-Japan MOU, WTO norms, trade data, and the scale of South Korea's foreign exchange and investments. Domestic experts also point out that his alternatives lack feasibility.

Even so, the Korean media sensationalized his claims, contributing to the formation of public opinion that strengthens the government's stance.

For this reason, suspicions are being raised as to whether the influence of the Korean government played a role in the background of why this piece was written.

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