South Korea’s economy at risk as Trump throws it under bus
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- Trump scrapped military exercises with South Korea after a phone call with Kim Jong Un and publicly rebuked President Lee for declining to support the US war effort against Iran despite 39,000 US troops stationed on the peninsula.
- The Defense Department pulled its only remaining Pacific-based aircraft carrier to the Middle East, a redeployment analysts at the Council on Foreign Relations say signals a US pivot away from Asia that benefits Beijing and unsettles Taiwan.
- Trump is demanding a $350 billion "signing bonus" from Seoul — roughly 18% of Korea's GDP — which President Lee warned in September 2025 could push Korea into a 1997-style financial crisis if paid in cash upfront.
- South Korea's exports surged 61.5% year-on-year in the first 20 days of August 2025, powered by a 198.8% spike in semiconductor shipments and a 242.1% jump in computer-related exports tied to AI demand.
- South Korea's automobile exports fell roughly 45% in the same August window, a contraction obscured by the chip boom but a warning sign for an economy the article says is exposed to climbing US Treasury yields.
- Japan, under Prime Minister Sanae Takaichi, faces its own $550 billion Trump demand and fresh tariffs despite Shinzo Abe's pre-inauguration 2016 trip to Trump Tower, underscoring a broader Asian reckoning with transactional US alliance politics.
- Georgetown's Victor Cha told Politico the disorder signals a paradigm shift: America First no longer treats alliances as intrinsic goods but as "expensive obligations," leaving Seoul and Tokyo to stall negotiations after the Supreme Court ruled White House tariffs unconstitutional.
Why it matters: Seoul's $350 billion Trump demand equals 18% of Korea's GDP, and Lee has warned a cash payout could trigger a 1997-style financial crisis. Meanwhile, the Defense Department's carrier pullout to the Middle East — paired with Trump's outreach to Kim — is driving Japan and Taiwan to question whether US security commitments in Asia remain credible, per CFR's Kurlantzick.
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