Trump's Tariff Gambit: Is Korea's Digital Crackdown the Real Target?

25%. That's the new tariff rate Trump wants to slap on South Korea. But behind this number lies a calculation more complex than a simple trade dispute.

On Tuesday, South Korea's Ministry of Trade, Industry and Energy revealed that the US had sent a letter expressing concerns over Korea's digital regulations. The letter, delivered to Science Minister Bae Kyung-hoon about two weeks ago, arrived on the same day Trump announced he's raising reciprocal and auto tariffs on Korea from 15% to 25%. The timing has observers wondering if there's more to this story.

Surface Excuse vs. Hidden Agenda

Trump's stated reason for the tariff hike is Korea's National Assembly dragging its feet on a special bill to support US investment commitments. The bill, submitted by the ruling Democratic Party in November, remains stuck in legislative limbo. Finance Minister Koo Yun-cheol urged lawmakers on Tuesday to fast-track the legislation during a closed-door meeting.

But many believe Trump's real target lies elsewhere: Korea's aggressive push into digital regulation and the ongoing probe into Coupang Inc., the US-listed e-commerce giant facing investigation over a massive data breach. US lawmakers and investors have branded the Coupang investigation "discriminatory," while the State Department expressed "significant concerns" last month about Seoul's regulatory moves affecting online platform businesses.

Digital Sovereignty vs. Market Access

Korea's digital regulation drive has accelerated in recent years, aimed at curbing Big Tech's data monopolies and unfair business practices. But from Washington's perspective, American companies are getting squeezed out of the Korean market through regulatory overreach.

The Coupang case is particularly symbolic. As the company challenged Amazon's dominance in Korea, its subsequent data breach investigation has been viewed by the US as targeted enforcement against American business interests. The fact that Prime Minister Kim Min-seok and VP JD Vance discussed managing the issue "to ensure it will not cause misunderstandings between the two governments" last week suggests how sensitive this has become.

No Exceptions for Allies

Trump's move reflects his transactional approach to international relations—even close allies aren't immune from economic pressure when US interests are at stake. Korea may be a crucial security partner, but in Trump's playbook, business is business.

Industry Minister Kim Jung-kwan, currently in Canada, is expected to head to Washington for talks with Commerce Secretary Howard Lutnick. Seoul faces a delicate balancing act: how to maintain regulatory sovereignty while avoiding further escalation with its most important ally.

The Broader Tech Cold War

This US-Korea friction reflects a larger global trend where digital regulation has become a new battleground for economic influence. Countries worldwide are grappling with how to regulate Big Tech without triggering retaliation from the companies' home countries. The EU faced similar pressure over its Digital Services Act, while India's data localization requirements have drawn criticism from US tech giants.

For Korea, the stakes are particularly high. As a tech-savvy nation with major domestic players like Samsung and Naver, it wants to protect local interests while maintaining access to global markets. But Trump's tariff threat shows how quickly regulatory policy can become a diplomatic flashpoint.