Trump’s coercive trade deals with Japan and South Korea, hailed in Washington as diplomatic wins, are now backfiring—driving America’s closest Asian allies toward economic backlash and strategic realignment away from U.S. dominance.
The Deals
Much of the turmoil engulfing South Korea and Japan today stems from the lopsided trade “deals” they were strong-armed into signing with the Trump administration just months ago. Consider South Korea’s case: Washington slapped a punishing 25 per cent tariff on Korean goods and then offered relief only on one condition—Seoul had to pledge a staggering US$350 billion in investments in the United States. After the deal was inked in July, the White House agreed to ease the tariff to 15 per cent, but only in exchange for what amounts to an economic tribute. Strip away the diplomatic spin, and the reality is hard to ignore: this deal isn’t a partnership; it’s coercion. The US did not negotiate with Seoul; it cornered it, demanding a payoff to access a market it was already entitled to under existing agreements. Put bluntly, the so-called “deal” looks less like free trade and more like extortion dressed up in the language of diplomacy. South Korea, therefore, is having serious second thoughts about it.
“The position we’re talking about is not a negotiating tactic, but rather, it is objectively and realistically not a level we can handle,” South Korea’s National Security Adviser Wi Sung-lac said on Channel A News television. “We are not able to pay $350 billion in cash,” he said. The reason for this rethinking, despite Trump’s repeated demands, is that South Korea’s economy only has US$410 billion in foreign exchange reserves. If it transfers US$350 from these sources to the US, it risks pushing its economy into a deep crisis. In fact, it will be much deeper than the impact that Washington’s original 25 per cent tariffs would probably have on its economy. “Without a currency swap, if we were to withdraw $350 billion in the manner that the US is demanding and to invest this all in cash in the US, South Korea would face a situation as it had in the 1997 financial crisis,” said the South Korean President in an interview with Reuters.
Japan’s situation is no different either. Sanae Takaichi, one of the two frontrunners to replace Shigeru Ishiba, recently signalled that a renegotiation of the US tariff deal—which includes a $550 billion payment—might be in order. “We must stand our ground if anything unfair that is not in Japan’s interests comes to light in the process of implementing the deal,” Takaichi said on local television about the hundreds of billions of dollars Trump World is demanding from Tokyo. “That includes a potential renegotiation.”
The Blowback for Washington
For Washington, the danger is not only that these deals could collapse under their own economic absurdity; it is that they will boomerang strategically. South Korea and Japan are not just markets for American goods—they are the twin anchors of America’s military presence in Asia. If allies begin to view U.S. trade policy as a shakedown rather than a shield, the consequences for Washington’s regional influence could be profound. An Asia that no longer trusts American commitments is an Asia that will hedge. It means that China, with its Belt and Road billions and its expanding security footprint, becomes the obvious alternative partner not known for imposing one-sided deals and/or demanding upfront payments. South Korea, under financial duress, might deepen yuan-based swap lines with Beijing to protect itself against currency shocks. Japan, boxed into an untenable fiscal commitment, could lean more heavily on its own regional trade frameworks, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with or without Washington’s blessing.
The reputational costs are even more corrosive. For decades, America sold itself as the “indispensable ally”—a partner that guaranteed both prosperity and security in Asia. That narrative collapses if the US is seen as extracting tribute under the threat of tariffs. Countries like Vietnam, Indonesia, and the Philippines—all courted by Washington as counterweights to Beijing—are watching closely. If even America’s closest allies, Japan and South Korea, are being squeezed dry, why should smaller states believe the US will treat them any better?
In the end, what the Trump administration is celebrating as a triumph of “America First” may in fact be the undoing of America’s long-term leverage in Asia. Alliances fray not just when enemies grow stronger, but when friends stop believing. By treating Tokyo and Seoul as sources of quick cash rather than indispensable partners, Washington is sowing the seeds of strategic decline in the very region it wants to dominate.
Already, the US has apparently “lost” India to Russia and China. It now risks the same with South Korea and Japan. The ultimate lesson for these and other countries in the region and beyond is that there is a dramatic strategic shift in the US and that they must adjust their ties accordingly. This shift, as it stands, is that Trump’s “America First” policies no longer value alliances as intrinsic goods and power assets for the US. Rather, alliances are increasingly viewed in Washington as expensive obligations and power liabilities that exploit US generosity. For Trump, therefore, these alliances are not indispensable. They are expendable. This realisation is growing across the world, with prospects of continued American dominance shrinking equally fast.
Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs
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