OTR: How Most North Asian Countries Avoided Trump's Highest Tariffs

This time, we turn to North Asia, examining the pledges, concessions, and trade-offs that Japan, South Korea, Taiwan, Mongolia, and North Korea made, or in some cases, avoided,  to secure better terms with Trump. China, given its unique position in this trade landscape, will be covered in a separate feature.

Japan: From Tense Threat to Managed Compromise

Japan was among the first in the firing line. Trump’s Liberation Day speech floated tariffs of up to 25% on Japanese vehicles and 50% on steel and aluminium. Tokyo scrambled to avert the full force of these measures, ultimately negotiating the rate down to 15%. Still higher than the single-digit tariffs Japan had long enjoyed, but far less punishing than the original threat.

To secure this reduction, Japan pledged more than US$550 billion in investments across US industries, from semiconductors and energy infrastructure to shipbuilding, with Washington retaining 90% of the profits. 

It agreed to expand market access for US goods, boosting rice imports by 75% and committing to US$8 billion in purchases of corn, soybeans, and bioethanol annually. Japan also removed restrictions on US cars and adopted American safety standards, while agreeing to buy 100 Boeing aircraft and billions in US defence equipment each year.

However, confusion soon followed the July 31, 2025, Executive Order issued by President Trump.

Both nations misinterpreted aspects of the adjusted tariffs, particularly on automobiles. Although they had agreed on a 15% reciprocal tariff, it was unclear whether this rate would replace the existing 27.5% auto tariff or be applied on top of it—raising alarm over possible “tariff stacking” and especially worrying Japan’s export-dependent auto industry.

On June 16, PM Ishiba met U.S. President Donald J. Trump in Canada during the G7 Kananaskis Summit. Image: Japan's MOFA/Facebook

In response to the uncertainty, Japanese trade envoy Ryosei Akazawa travelled to Washington on August 5, 2025, to seek clarity and urge US officials to quickly issue an executive order formalising the agreed terms. His visit underscored the differing interpretations of the deal’s implementation and the importance of the tariff concessions to Japan’s auto sector.

By August 7–8, 2025, following negotiations, the US agreed to amend the July 31 order—ensuring Japan would not face compounded tariffs, promising refunds for excess duties, and reaffirming the reduction of auto tariffs to 15%. Akazawa called the stacking error “regrettable” and noted this amendment restored the agreed framework.

The relationship between Trump and Japan has combined moments of friction with pragmatic cooperation.

In his first term, Trump frequently raised concerns over Japan’s trade surplus and defence contributions, but his personal rapport with the late Prime Minister Shinzo Abe—strengthened through regular golf games—helped maintain the stability of the alliance.

In his second term, under Prime Minister Shigeru Ishiba, the partnership remains strategically important in the Indo-Pacific, although recent tariff disputes underscore the sensitivity of economic arrangements between the two countries.

South Korea: Dodging the 25% Tariff Hammer

South Korea’s export-heavy economy faced similar risks. Liberation Day placed Seoul under threat of a 25% tariff on exports to the US, particularly autos, semiconductors, and steel. Within weeks, a high-level delegation arrived in Washington to secure a better outcome.

The resulting deal set the reciprocal tariff at 15%, covering even the politically sensitive automotive sector. In exchange, South Korea promised US$350 billion in investments targeting US shipbuilding, semiconductor fabrication, batteries, and biotechnology, with the White House claiming the US would capture a large share of the profits. Seoul also agreed to purchase US$100 billion in American energy products, including liquified natural gas and crude oil.

While Trump’s public statements hinted at wider market openings, particularly for agriculture, South Korea firmly resisted further liberalisation for sensitive products like rice and beef. The relationship between the two nations remains a careful balancing act.

In Trump’s first term, he openly demanded greater payments for US troop presence and questioned the value of the alliance. His unconventional diplomacy with North Korea sometimes bypassed Seoul altogether.

Now, under President Lee Jae-myung, managing Trump is seen as an economic and security priority—with Lee even saying he would “crawl through Trump’s legs” if necessary to secure a good deal.

Taiwan: Higher Rate Reflects Tough Bargaining

Taiwan faced one of the toughest starting positions. Under Trump’s April 2 announcement, most of its exports to the US were set to face a potential 32% reciprocal tariff, a severe threat to the island’s export-reliant economy.

During a 90-day interim period, Taipei secured a temporary 10% rate while negotiating for a lower final figure. By late July, the two sides agreed on a 20% reciprocal tariff, higher than the 15% rates granted to Japan and South Korea, leaving Taipei at a relative disadvantage.

The centrepiece of Taiwan’s concessions was a US$100 billion investment pledge by Taiwan Semiconductor Manufacturing Company (TSMC) for new fabrication plants in the United States, primarily in Arizona, set to be rolled out over the next decade.

Taiwan also committed to increasing imports of US liquefied natural gas, crude oil, and agricultural products, while Washington sought reduced non-tariff barriers, particularly on vehicle imports and licensing rules.

Trump’s dealings with Taiwan have historically combined strategic support with transactional pressure. In his first term, he broke precedent by speaking directly with then-President Tsai Ing-wen, authorised major arms sales packages, and publicly criticised the island for “taking” US chip manufacturing jobs while urging higher defence spending.

Under President Lai Ching-te, Taiwan remains a critical US partner in the Indo-Pacific, but the higher tariff compared to other allies has stirred concern in Taipei. Negotiations to close that gap are ongoing.

Mongolia: No Crisis, But Quiet Gains

Mongolia’s trade ties with the US are small, and Liberation Day tariffs reflected that—the country received the baseline 10% reciprocal rate, avoiding the high-stakes brinkmanship seen elsewhere. Given the small scale of bilateral trade, no significant concessions were required.

Instead, Washington and Ulaanbaatar focused on strategic and developmental cooperation. This includes the US-funded Millennium Challenge Corporation compact to improve Ulaanbaatar’s water infrastructure. Ongoing efforts to pass the “Third Neighbour Trade Act” to grant duty-free access for Mongolian cashmere and textiles, and collaboration on critical minerals to diversify supply chains away from China and Russia.

The personal relationship was warm in Trump’s first term, marked by the 2019 White House visit of President Battulga and a formal “strategic partnership” declaration. Under Prime Minister Oyun-Erdene, Trump’s second term is expected to continue this low-tariff, high-strategy approach.

North Korea: Sanctions, Not Tariffs

North Korea was the exception on Liberation Day, not because of special treatment, but because decades-old US sanctions already function as a near-total trade ban. The Trump administration’s goal was not tariff reduction, but denuclearisation in exchange for sanctions relief.

In his first term, Trump held three unprecedented meetings with Kim Jong Un, building personal rapport but failing to secure a verifiable disarmament deal. In his second term, both sides have signalled potential openness to dialogue, though Pyongyang insists it will not discuss denuclearisation. With trade effectively non-existent, the relationship remains defined by high-stakes geopolitics rather than economic negotiation.

Meeting Between President Trump and Chairman Kim Jong Un in June 2019. Image: Wiki Commons

From Tokyo to Taipei, Seoul to Ulaanbaatar, Trump’s reciprocal tariffs prompted North Asian leaders to weigh the costs and benefits of securing lower trade barriers. For some, this involved substantial investment commitments; for others, it provided an opportunity to reinforce strategic relationships. In each case, the agreements reflected both economic considerations and diplomatic positioning, underscoring how trade policy and broader bilateral relations are closely linked in the current US approach in its “America First” era.

-Asia Media Centre