Trump: 'If Korea doesn't agree to the Alaska LNG investment, I'll charge them double' — possible tariff hike threat
Meeting reporters at the White House in Washington on Nov. 2 (local time), Trump pushed back on Seoul's position regarding South Korea's investment in the Alaska liquefied natural gas (LNG) project, saying, "I didn't announce it prematurely." "If Korea doesn't want it, that's fine with me," Trump said. "We can just charge them more." He then asked reporters, "Are you saying Korea didn't agree?" and added, "Tell them that if they don't agree, we'll double it."
On Oct. 30, Trump had abruptly announced South Korea's investment in the Alaska LNG development project from the Oval Office, joined by Commerce Secretary Howard Lutnick, Interior Secretary Doug Burgum, Energy Secretary Chris Wright, Republican Sen. Dan Sullivan of Alaska and Alaska Gov. Mike Dunleavy. Lutnick pinned South Korea's investment in the Alaska LNG project at "more than $50 billion." In response, President Lee Jae-myung ppushed back on X (formerly Twitter) on Nov. 1, writing, "Among the investment projects in the U.S. that Washington announced, we agreed to begin 'working' on the Alaska LNG project on the premise that its commercial viability is confirmed and that it complies with South Korean legal procedures." He added, "For nuclear power as well, commercial viability must be guaranteed on a specific plant-by-plant basis."
It was unclear exactly what Trump meant by charging more. In diplomatic circles, some read it as a hint at a further tariff increase, noting that South Korea pledged $200 billion in U.S. investment last November in exchange for a cut in tariffs from 25% to 15%. State Department spokesperson Tommy Pigott, meeting reporters at the Foreign Press Center in Washington the same day, stressed that "Korea's investment projects in the United States will be a genuine 'win-win' for the people of both countries." Asked about the gap between the two governments' announcements on the Alaska LNG project and other deals, he said, "What matters is that we reached an agreement."
Also on Nov. 2, Trump wrote on his social media platform Truth Social: "I am pleased to announce that our negotiations with Korea keep getting better," adding, "$8.4 billion for enhanced oil recovery (EOR) projects." Enhanced oil recovery is a technique that injects carbon dioxide or other substances into oil fields to raise internal pressure and extract more crude. What project he was referring to is unknown, and it appears nowhere in the two countries' trade agreement. Trump added that "increasing oil and gas production means American energy dominance and the future of global energy security."
Washington political circles suspect Trump's retaliatory "double the charge" remark relates to tariffs under Section 301 of the Trade Act. After the Supreme Court struck down the reciprocal tariffs on Feb. 24, the Office of the U.S. Trade Representative (USTR) imposed "forced labor tariffs" of 10% to 12.5% under Section 301 on 60 economies including China, South Korea, the European Union, Japan and India, effective July 24. It also signaled it would add overcapacity tariffs on top. South Korea, already hit with a 12.5% forced labor tariff, would face the same effective rate as the previous 15% reciprocal tariff with just 2.5 percentage points of overcapacity tariffs added. If Trump was referring only to the existing forced labor tariff when he spoke of charging double, that would mean returning the rate to the 25% level that preceded the trade deal. On Jan. 26 this year, Trump similarly threatened to raise the reciprocal tariff back to 25% from 15% while criticizing the South Korean National Assembly's delay in passing a special law on U.S. investment.
In a Nov. 1 interview with Japan's Nihon Keizai Shimbun (Nikkei), USTR Representative Jamieson Greer said the results of overcapacity investigations into China and others would be released within weeks. "China itself acknowledges the overcapacity problem to some degree," Greer said, while also taking aim at Japan for "keeping alive zombie companies that should have gone bankrupt."
U.S. diesel prices hit record highs; G7 releases 100 million barrels after 'export ban' threat
Section 338 of the Tariff Act, which Trump invoked during his trade war with Canada, also bears watching. Enacted on June 17, 1930, in the early days of the Great Depression, Section 338 is an antiquated provision intended to deliver an "eye for an eye" response to countries that impose discriminatory tariffs or unfair treatment on U.S. goods. It allows the president to impose punitive tariffs of up to 50% on imports from a specific country immediately, without going through Congress. It also grants the president sweeping authority to order import bans to gain leverage in trade negotiations. Trump used Section 338 to order a ban on imports of certain Canadian products.
The fallout has spread to Europe as well. Reuters reported on Nov. 1 that the Trump administration pressed France and Germany to release stockpiled diesel, warning it could ban U.S. diesel exports if they failed to comply. With surging domestic diesel prices threatening to swing the midterms, Washington passed the burden to Europe. According to sources, the U.S. also asked the EU to release 120 million barrels of diesel over the next six months. The average U.S. diesel price climbed to $6.52 a gallon as of Oct. 22, up 76.7% from a year earlier.
In March, just after the outbreak of the Iran war, more than 30 member countries of the International Energy Agency (IEA) agreed to release 400 million barrels of strategic reserves to stabilize oil prices. The U.S. took on 172 million barrels, with European countries handling 20% of the total. Washington subsequently grew frustrated, concluding that France and Germany had failed to deliver on their reserve-release commitments.
In truth, Europe's reluctance to tap strategic reserves reflects an energy supply crunch more severe than America's. Europe has struggled with energy supply since banning imports of Russian crude and petroleum products after the war in Ukraine. Disruptions to Middle East crude supply from the Iran war have only deepened its dependence on U.S. fuel. According to European Commission figures released the same day, the average diesel price at service stations hit a record 2.24 euros per liter, up from about 1.59 euros before the Middle East war broke out. AFP reported that diesel prices hit all-time highs in 12 EU member states, including Belgium, Italy, Romania and Poland.
On Nov. 2, the Group of Seven — the U.S., Britain, France, Germany, Italy, Canada and Japan — agreed to release 100 million barrels of stockpiled diesel and crude over four months. After a meeting chaired by French President Emmanuel Macron, the G7 issued a joint statement saying it had "decided to jointly release 100 million barrels of diesel, crude and other products through the International Energy Agency (IEA) to stabilize global energy markets." The statement said "G7 members and partner countries will prioritize releasing a substantial volume of diesel within the first 20 days."
The G7 also agreed at the meeting not to impose diesel export bans among members. They will coordinate maintenance schedules at members' refineries as well.
EU member states held an emergency meeting the same day to discuss their response. According to Reuters, they exchanged views on a French proposal for European countries to release 50 million barrels of diesel and IEA members to release 50 million barrels of crude.
Struggling to hold Senate battlegrounds; more unagreed investment announcements may follow
Trump also wrote on Truth Social that "Europe has just agreed to release massive amounts of stockpiled diesel," stressing that "this process will begin immediately." He did not specify which countries would release how much.
At a campaign rally the same day at the Mitchell Center of the University of South Alabama, Trump said, "We're working with Venezuela and pulling out billions of dollars' worth of crude," claiming, "Soon we'll refill our strategic reserves at no cost." U.S. strategic petroleum reserves currently stand below 284 million barrels, the lowest level since 1982.
Trump repeatedly highlighted Europe's agreement to release diesel reserves, pledging that "diesel prices are already coming down, and they'll come down much more once the Iran war is wrapped up." He also said the U.S. is "taking in enormous revenue from tariffs," adding confidently that "if Republicans win, $5,000 will go into everyone's pocket and America will achieve unprecedented economic success." At the Republican convention in Dallas, Texas, on Oct. 9, Trump had promised to pay a $5,000 dividend to every American adult if Republicans win both the House and the Senate.
Trump's aggressive turn against allies and partners stems from a midterm outlook that has grown murkier than expected. Political observers initially expected Democrats to reclaim the House, where all 435 seats are contested, while Republicans held the Senate, where only 35 of 100 seats are up. But as Senate races tightened even in Republican strongholds such as Alaska and Texas, the White House grew anxious. When Trump announced South Korea's U.S. investment on Oct. 30, he conspicuously promoted Sullivan, the Alaska incumbent.
Ohio and South Carolina, which Lutnick cited as sites for large nuclear plant construction, were also once solidly Republican but are now toss-ups. On Oct. 28, Trump announced that Mesabi Metallics, an affiliate of an Indian conglomerate, would build a $15 billion steel mill in Iowa, a razor-thin battleground. Maine, which has the highest share of households using heating oil, and farm states such as Ohio, Kansas and Iowa heading into harvest season are all battlegrounds sensitive to diesel prices.
U.S. political outlet Politico reported on Nov. 2 that Trump's battleground-focused megaproject announcements have drawn skepticism "even among Republican strategists, who call them too little, too late." With the earliest of those projects not coming online until 2030, the assessment was that they cannot win back voters frustrated by high prices, high fuel costs and high interest rates right now.
With Trump increasingly pressed as the election nears, more unilateral U.S. announcements of investment pledges may follow. Above all, attention centers on whether South Korea could end up worse off as Washington again wields tariffs as a weapon. If demands on allies cross the line, global equity markets could swing sharply between hot and cold.
※ "Trump Stocker" is a column delivering on-the-ground reporting and analysis of U.S. markets, companies, policy, politics and diplomacy that can inform investment decisions in the era of President Donald Trump. Subscribe to receive useful news from the United States.
