South Korea, Japan aim to boost trade, energy ties to navigate global tariff jitters

South Korea and Japan are striving to enhance their trade partnership in goods, services, and energy as part of their efforts to navigate the uncertainties in global tariffs, while a stable supply of South Korean clean oil products will continue to ensure fuel security for Japanese consumers, government officials and refining industry sources said April 3.

Global trade flows in goods and services could drastically change due to a series of US tariffs. In times of great uncertainty, major Asian economies like South Korea and Japan must ensure that trade between the two large economies in Asia remains robust to stimulate economic activity and growth, according to officials and public relations representatives from the state-run Korea Trade-Investment Promotion Agency and South Korea's Trade Ministry, as well as the refining industry.

Washington announced blanket tariffs of at least 10% on all imported goods, along with a sliding scale of reciprocal duties on major trading partners. Among the large US trade partners facing large new tariffs are India at 26%, Japan at 24%, South Korea at 25%, and the UK, which is also subject to the new 10% global minimum tariff.

As far as the Asian oil trades are concerned, Japan has recently become South Korea's second-largest market for oil products. Japanese businesses and consumers rely heavily on South Korean middle distillate fuels, making it essential to ensure stability in both spot and term supplies of diesel, jet fuel, and kerosene for Japanese customers, according to middle distillate sales executives at two South Korean refiners and analysts at the Korea Petroleum Association.

Japan's reliance on South Korean clean oil products is expected to continue growing due to declining refining capacity. The Japanese energy sector finds South Korean refiners and fuel suppliers crucial trade partners amid global supply chain and tariff uncertainties, as noted by a market analyst at a Singapore-based integrated Japanese trading company.

In 2024, South Korea exported a total of 49.625 million barrels of clean oil products—including gasoline, kerosene, diesel, and jet fuel—to Japan, marking a record high in annual shipments to the neighboring country, according to data from the state-run Korea National Oil Corporation.

Concerns are rising this year regarding the export environment for petroleum products due to increased instability in the global economy influenced by the Trump administration's energy and trade policies, as stated by an official from the Korea Petroleum Association. However, Japan has emerged as an important customer and trading partner in the energy and fuel sectors, being the second-largest market for South Korean clean oil products.

Trade ministers' meeting

Meanwhile, Dukgeun Ahn, South Korea's Minister for Trade, Industry and Energy, met with Japan's Minister of Economy, Trade and Industry, Muto Yoji, in Seoul on March 31 to commemorate the 60th anniversary of the normalization of diplomatic relations between the two nations, coinciding with the 13th Korea-Japan-China Economic and Trade Ministers' Meeting.

The meeting signifies a renewed commitment to strengthening economic ties between South Korea and Japan as both nations navigate the complexities of global trade dynamics, a Ministry of Trade, Industry and Energy (MOTIE) official told Platts, part of S&P Global Commodity Insights.

The ministers emphasized the importance of ongoing dialogue between their governments and the private sector, particularly in critical areas such as supply chains, advanced industries, and emerging energy sectors, including hydrogen, according to the MOTIE official.

During the discussions, both ministers expressed satisfaction with the active intergovernmental cooperation and private-sector exchanges that have characterized their relationship in recent years. They underscored the necessity for enhanced collaboration to achieve concrete outcomes, particularly in light of the 60th-anniversary celebrations.

In response to the rapidly evolving global trade landscape, Ahn and Muto shared insights and strategies to address emerging challenges. They agreed to utilize both bilateral and multilateral frameworks, including the Korea-US-Japan and Korea-Japan-China platforms, to facilitate information sharing and develop coordinated responses to pressing issues requiring joint action, according to MOTIE.

Both sides will also make joint efforts toward the successful hosting of upcoming major international events, including the Osaka-Kansai Expo 2025 (April–October 2025), the opening ceremony of the Korea Pavilion (April 13, Osaka), Korea Day (May 13, Osaka), as well as the Asia-Pacific Economic Cooperation (APEC) Trade Ministerial (Jeju Island) and Energy Ministerial (Busan) meetings, and the APEC CEO Summit.