U.S. redesignates Korea on currency watch list

The U.S. Treasury has relisted Korea on its currency monitoring list, citing a large trade and current account surplus. The move signals renewed scrutiny and raises concerns that Seoul may face pressure to strengthen the won.

U.S. Secretary of the Treasury Scott Bessent speaks to reporters before walking into the White House in Washington, United States, March 13. [REUTERS/YONHAP]

The Trump administration is once again putting Korea in its crosshairs — this time over currency.

The U.S. Treasury Department has redesignated Korea as a country to monitor for its foreign exchange policies, a move likely to amplify pressure on Seoul as Washington sharpens its focus on exchange rates in trade negotiations. The designation, made public on Thursday, comes amid the administration’s aggressive tariff-driven trade policy and signals that currency issues will remain front and center.

In its semiannual "Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States," submitted to Congress, the Treasury listed Korea among nine economies under monitoring. Others include China, Japan, Singapore, Taiwan, Vietnam, Germany, Ireland and Switzerland.

Korea had been dropped from the watch list in November 2023 — its first removal in seven and a half years — but was placed back on it in November 2024, just before Trump returned to office. Ireland and Switzerland were newly added in this latest report, while the other seven were re-listings from last year.

Under the 2015 Trade Facilitation and Trade Enforcement Act, the Treasury reviews macroeconomic and exchange rate policies of the top 20 U.S. trading partners. Countries meeting two out of three criteria are designated for monitoring: a bilateral trade surplus with the United States exceeding $15 billion, a current account surplus above 3 percent of GDP and net foreign exchange purchases in at least eight of the past 12 months, totaling more than 2 percent of GDP.

While the designation does not trigger immediate penalties, it functions as a formal warning, signaling that the United States will be closely watching Korea’s currency practices.

Korea met two of the three thresholds — its large trade surplus with the United States and its current account surplus. Countries that meet all three are labeled “currency manipulators,” officially referred to as Enhanced Analysis Countries or countries for enhanced engagement, which is a more serious designation that can lead to direct restrictions such as limiting investments by U.S. firms.

Currency issues had already emerged as a flashpoint during the Korea-U.S. “2+2” economic dialogue held in April, where Washington pushed for the matter to be included as a key agenda item. The renewed designation has raised concerns in Seoul that the United States may ramp up pressure for a stronger won.

In the report, the Treasury warned it will closely monitor developments that may give rise to significant currency misalignments, and pledged a more aggressive assessment of trading partners’ exchange rate policies to support the “America First” trade strategy.

The cover of the Treasury Department's ″Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States.″ [SCREEN CAPTURE]

"President Trump is committed to pursuing economic and trade policies that will spur an American revitalization marked by strong economic growth, the elimination of destructive trade deficits, and countering unfair trade practices," the report read.

It specifically flagged instances where central banks intervene under the guise of stabilizing markets amid appreciation pressure, vowing tighter scrutiny.

The department also raised the possibility of recommending tariffs against countries found to engage in unfair currency practices.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY KIM HYOUNG-GU [yim.seunghye@joongang.co.kr]