The Complex Crisis of ROK-US Trade Friction: A Test of Alliance Strategy Management Triggered by the Coupang Discrimination Controversy and White House Pressure

Executive Summary

Executive Summary

The ROK-US trade friction surrounding the Coupang discrimination controversy, while superficially a regulatory dispute involving an individual company, is in reality a complex crisis where the US's digital trade strategy is being applied to allies without exception, manifesting directly in Korea. This crisis encompasses three overlapping dimensions: trade and economic security, alliance and security, and politics and diplomacy. Notably, the White House has explicitly targeted the current administration with pressure, and realistic concerns are emerging in diplomatic circles about the possibility of the US linking the Coupang issue to core security agendas such as nuclear-powered submarine construction and uranium enrichment talks. Consequently, this matter has been elevated to a test of the ROK-US alliance's strategic management capabilities. The most plausible scenario (with an approximately 55% probability) is a two-track management approach where the Coupang issue persists as a source of friction without short-term resolution. In this context, the Korean government's primary task is to transition from a declarative stance to a concrete action plan for 'Issue Compartmentalization'—actively preventing the issue from spilling over into security cooperation agendas while maintaining a principled stance on the legal justification of the Coupang investigation. To achieve this, the Korean government must simultaneously strengthen its diplomacy with the US Congress, strategically utilize the consultation channels for the implementation of the Joint Fact Sheet, and proactively build trust by enhancing the transparency of digital regulations. This balanced strategy aims to minimize alliance management costs without compromising regulatory sovereignty.

I. Issue Situation Analysis

ROK-US Trade Friction: The Coupang Discrimination Controversy and White House Pressure — Issue Situation Analysis

1. Background and Progression of the Issue

Coupang operates an e-commerce platform through its Korean subsidiary, but its parent company, Coupang Inc., is a US-based entity listed on the New York Stock Exchange (NYSE), giving it the legal character of an American company. This structural characteristic forms the core background of the current ROK-US trade friction. Following a large-scale personal data breach at Coupang in 2025, the Korean government initiated investigations and hearings in accordance with domestic law. However, Coupang claimed that the Korean government was targeting it with discriminatory actions during this process and began actively raising the issue with the US Congress and administration [3][8].

Coupang's lobbying efforts quickly resonated within US political circles. In February 2025, the US House Judiciary Committee summoned Harold Rogers, interim representative of Coupang Korea, to testify. In April of the same year, 54 Republican members of the House of Representatives sent a letter to Ambassador Kang Kyung-wha in Washington, urging an end to discrimination against American companies like Coupang [8]. As the Coupang issue gradually gained traction within the US Congress, it officially emerged as a ROK-US diplomatic issue on July 1, 2026, when the Republican members of the US House Judiciary Committee released an interim investigation report titled 'Blocking Competition: Korea's Discriminatory Attacks on American-Owned Companies' [3][5].

2. Current Situation (Latest Developments)

On July 2 (local time), the day after the release of the US House Judiciary Committee report, a White House official issued a statement to Korean media, directly asserting, "By any reasonable measure, Coupang is being targeted by the Lee Jae-myung administration." The statement warned, "The Trump administration will not tolerate unfair trade practices, including actions that restrict market access for American digital services" [1][8]. The issue has thus escalated from a congressional report to direct pressure from the executive branch.

In response, the Korean government issued counter-statements for two consecutive days. On July 2, Ministry of Foreign Affairs spokesperson Park Il expressed regret, stating that the report "unilaterally reflected only Coupang's claims" [7]. On July 3, National Security Advisor Wi Sung-lak held a press briefing, affirming that "all investigations into Coupang are being conducted non-discriminatorily in accordance with due process under domestic law" [1][6]. The National Intelligence Service also released a statement refuting the report's contents as factual [3][7], and the National Assembly Secretariat expressed regret that the US House report did not sufficiently reflect the constitutional authority and procedures of the Korean National Assembly [8].

Currently, the issue is likely to be discussed within the framework of inter-agency consultations for the implementation of the Joint Fact Sheet agreed upon by the ROK-US leaders last November. However, concerns are being raised in diplomatic circles that the US may use the Coupang issue as leverage to further delay nuclear talks related to the construction of nuclear-powered submarines and the enrichment and reprocessing of spent nuclear fuel [5][8]. In fact, the first ROK-US nuclear energy consultation meeting was held in Seoul last month, but the schedule for the second meeting, to be held in the US, is still under coordination and has not yet been confirmed [5].

3. Key Actors and Their Positions/Interests

Trump Administration (White House)has emerged as the most aggressive actor in this issue. The Trump administration's core trade policy is to ensure market access for American digital service companies, and it is leveraging the Coupang issue as leverage for trade pressure against Korea by framing it as a case of "unfair trade practices" [1][8]. This demonstrates the Trump administration's application of a transactional diplomacy that prioritizes economic interests even with allies.

Republican Members of the US House Judiciary Committeeplayed a role in drafting and releasing the interim report by actively accepting Coupang's claims. The report alleged that the Korean government engaged in a "harassment campaign" against Coupang, causing its market capitalization to plummet by over 40%, potentially leading to economic losses exceeding $500 billion for the US over the next decade [8]. It also included claims that South Korea's National Intelligence Service pressured Coupang employees regarding operations in China and attempted to criminally prosecute the interim CEO, a US citizen [3]. The report further claims that South Korea violated the trade agreement between the two heads of state specified in the ROK-US Joint Fact Sheet, suggesting an intent to escalate the Coupang issue into a larger trade dispute [5].

Coupang (Coupang Inc.)is the direct instigator of this incident. Coupang has actively lobbied the US Congress and administration, claiming that the Korean government's investigation was discriminatory and targeted. It is employing a strategy to secure protection from the US political establishment by utilizing its status as a US-based corporation, aligning with its interest in achieving favorable outcomes within the Korean regulatory environment [3][4].

Korean Government (Presidential Office, Ministry of Foreign Affairs, NIS)is responding defensively. The government consistently emphasizes that all investigations into Coupang have been conducted legally and non-discriminatorily under domestic law, refuting the US claims as solely based on Coupang's one-sided assertions [1][6][7]. Simultaneously, it is pursuing a strategy of 'isolation and separation' to prevent the issue from escalating into security cooperation agendas, such as nuclear-powered submarine cooperation. National Security Advisor Wi Sung-lak's statement, "We will strive to ensure this issue does not become excessively large and cause repercussions in other areas of ROK-US relations," clearly illustrates this approach [1][5].

Korean National Assembly and the Democratic Party of Koreastrongly oppose the US Congressional report. The Democratic Party of Korea criticized the report for distorting the Korean government's position based on Coupang's one-sided claims and unverified data [4]. The National Assembly Secretariat also expressed regret that the US House report did not sufficiently reflect the constitutional authority and operational procedures of the Korean National Assembly [8].

4. Summary of Key Issues

The key issues in this matter can be summarized into three main levels.

First, whether the Korean government's investigation of Coupang constitutes discriminatory and targeted action. The US side claims that the Korean government intentionally targeted and discriminated against a US-owned company, while the Korean government maintains that all investigations were conducted non-discriminatorily in accordance with domestic law [1][6][7]. A fundamental difference in perception regarding the facts exists between the two sides, and as long as this gap remains unbridged, the conflict is likely to persist.

Second, conflicting interpretations regarding the implementation of the ROK-US Joint Fact Sheet. The US side claims that Korea violated the trade agreement stipulated in the Joint Fact Sheet agreed upon by the leaders during their summit last year [5], while the Korean government counters that it is faithfully implementing the promises made in the Joint Fact Sheet [8]. This interpretive conflict is expected to become the most contentious point of debate in future inter-agency consultations.

Third, the possibility of linking trade friction to security cooperation. This is the strategic issue that requires the most attention in this matter. If the Coupang issue becomes linked to ROK-US nuclear cooperation agendas, such as the construction of nuclear-powered submarines, uranium enrichment, and spent nuclear fuel reprocessing, it could act as a complex challenge to overall alliance management beyond a simple trade dispute [5][8]. If the US adopts a transactional approach, linking economic leverage to security cooperation, this issue warrants the most serious monitoring as Korea could be exposed to structural vulnerabilities, facing pressure on both trade and security fronts simultaneously.

II. In-depth Issue Analysis

ROK-US Trade Friction: The Coupang Discrimination Controversy and White House Pressure — In-depth Issue Analysis

1. Analysis of the Root Causes of the Issue

The root cause of this ROK-US trade friction lies not in a simple corporate dispute, but in the structural tension that arises when a company dominated by US capital becomes subject to Korean legal regulations. Coupang has a dual corporate structure where its US-based parent company, Coupang Inc., operates in the domestic market through its Korean subsidiary. This structure grants Coupang a dual status: it is an entity subject to Korean domestic law within Korea, yet it can seek protection from the US political establishment as an 'American company.' Ultimately, the structural vulnerability where the Korean government's legitimate regulatory actions can be reinterpreted as 'discrimination against a foreign company' by the US side is the starting point of this incident.

A deeper cause can be found in the Trump administration's trade policy stance. Since its inception, the Trump administration has defined any action restricting the market access of US digital service companies abroad as an 'unfair trade practice' and has used it as a tool for trade pressure. The explicit warning from a White House official that "The Trump administration will not tolerate unfair trade practices, including actions that restrict market access for American digital services" [8] suggests that this issue is being handled as part of the US's digital trade strategy, beyond the scope of an individual company's problem. In other words, the Coupang incident is being used as a symbolic case demonstrating the Trump administration's willingness to exert trade pressure even on its allies.

Furthermore, the political motivations of the Republican Party in the US Congress are also at play. The interim report by the Republican members of the US House Judiciary Committee, based solely on Coupang's claims, and the collective letter sent by 54 Republican House members [8] are the result of Coupang's strategic lobbying efforts towards the US political establishment. The fact that the testimony of Coupang's interim representative at the US congressional hearing was directly reflected in the report [3] indicates that the Korean government's position was not adequately represented in the US political process, revealing a structural vulnerability in Korea's diplomatic capacity with the US Congress.

2. Structural Context

Political Structure

At the political level, this incident occurred at the intersection of South Korean domestic politics and US foreign policy. The White House official's explicit reference to the "Lee Jae-myung administration" in the statement [1][8] indicates that the US is aware of South Korea's domestic political landscape and is using it as a tool for pressure. This can be interpreted as direct dissatisfaction expressed by the US regarding policy directions linked to specific political factions in Korea, extending beyond mere corporate protection, and thus carries the character of external pressure on Korea's sovereign policy decisions.

Internally, the issue is politically sensitive in South Korea. The Democratic Party of Korea's strong opposition to the US Congressional report [4] has elevated the matter to a domestic political issue. The government's stance on the Coupang issue could lead to political evaluations of its ability to manage ROK-US relations. National Security Advisor Wi Sung-lak's direct briefing [1][6] signifies that the issue has been elevated to a national security agenda beyond a mere trade dispute, and simultaneously reflects the government's burden of managing this issue politically.

Economic Structure

From an economic structural perspective, this incident starkly illustrates the tension between regulatory sovereignty and market openness in the digital platform economy. While the Korean government asserts that its investigation into Coupang's data breach was lawful under domestic law [1][6], the US side frames it as a restriction on digital service market access, applying the framework of trade agreement violations [5][7]. In particular, the US House report's claim that such measures could "result in economic losses exceeding $500 billion for the US over the next decade" [8] is interpreted as a deliberate strategy to expand an individual corporate matter into a discourse of macroeconomic damage, thereby maximizing negotiation leverage.

Furthermore, this incident is directly linked to the implementation of the Joint Fact Sheet agreed upon by the ROK-US leaders last November. By claiming that Korea's investigation of Coupang violated the trade agreement stipulated in the Joint Fact Sheet signed by the leaders [5], the Coupang issue has now escalated into a trade dispute over the implementation of an agreement signed by the heads of state. This creates a structural disadvantage for Korea, potentially placing it in a defensive position in future ROK-US trade consultations.

Security Structure

From a security perspective, the most serious implication of this incident is that trade friction could become linked to security cooperation agendas. Currently, negotiations are underway between South Korea and the United States regarding nuclear-powered submarines, uranium enrichment, and spent nuclear fuel reprocessing—matters directly related to South Korea's core security interests. Amidst the continuous delays in these negotiations [5][8], there are concerns in diplomatic circles that the U.S. might use the Coupang issue as a pretext to further postpone the nuclear energy talks [5][8]. This suggests that the U.S. could employ a 'linkage strategy,' leveraging trade pressure as a bargaining chip for security cooperation.

This potential security linkage poses complex challenges to the management of the ROK-U.S. alliance. The statement by National Security Advisor Wi Sung-lac, "We will make efforts to isolate and separate this issue so that it does not excessively escalate and create ripples in other areas of ROK-U.S. relations" [5][8], indicates that the South Korean government already recognizes this linkage risk as serious. However, the high likelihood that the Coupang issue and the nuclear-powered submarine issue will be discussed at the same table within the framework of the Joint Fact Sheet implementation talks [7][8] reveals the structural difficulty of physically separating these two agendas.

3. Comparison of Historical Precedents and Similar Cases

The most similar historical precedent to the current situation is the trade friction between the U.S. and Japan in the 1980s and 1990s. At that time, the U.S. characterized Japan's practices in the semiconductor, automobile, and retail markets as 'unfair trade' and exerted strong trade pressure, including invoking Super 301 and designating Japan as a priority foreign country. In particular, the U.S. designation of Japan under Super 301 in 1989 went beyond mere trade imbalances, representing an attempt by the U.S. to alter the domestic economic structure and regulatory practices of an ally. The current Coupang situation, where the U.S. defines South Korea's domestic regulatory actions as violations of trade agreements and exerts pressure through its executive branch, is structurally similar to this historical pattern.

Furthermore, a notable aspect of the U.S.-Japan trade friction was its complex entanglement with the security alliance relationship. While Japan resisted U.S. trade pressure, its structural vulnerability due to high security dependence ultimately led it to make significant concessions. South Korea faces a similar structural dilemma, as trade friction is occurring while it remains highly dependent on the U.S. in security areas such as the presence of U.S. Forces Korea, extended deterrence, and cooperation on nuclear-powered submarines.

A more recent similar case is the U.S. pressure on the EU regarding Digital Services Taxes (DST). When EU countries like France and the UK imposed DSTs on American tech giants such as Google, Apple, and Amazon, the Trump administration characterized this as discriminatory action against American companies and threatened retaliatory tariffs. This case demonstrates that it has been a consistent strategy of the Trump administration to target the digital regulatory policies of its allies as subjects of trade pressure. The investigation into Coupang in South Korea can also be understood as an extension of this pattern of U.S. digital trade pressure.

South Korea's own historical precedent can be found in the South Korea-China trade friction surrounding the 2016-2017 deployment of THAAD. At the time, China expressed its dissatisfaction with security issues through economic retaliation (e.g., the Hallyu ban, boycott of Lotte), and South Korea experienced an extreme dilemma between security and the economy. Although the direction of this incident is reversed—where the United States seeks to link trade issues with security cooperation—it serves as an important comparative case in that it shows a structurally similar pattern of 'security-economy linkage pressure.' The precedent of the THAAD incident, where South Korea could not elicit an explicit acknowledgment of retaliation from China and concluded with a vague expression of the '3 Noes' position, also offers a lesson on how limited South Korea's response can be to the linkage pressure from great powers.

4. Key Variables in Issue Development

The key variables that will determine the future development of this issue can be broadly categorized into four.

First, the method of progress in the Joint Fact Sheet implementation talks. Currently, both South Korea and the U.S. are engaged in inter-agency consultations to implement the agreement reached at the summit last year, and it is highly likely that the Coupang issue and nuclear cooperation will be discussed within this framework [7][8]. If the U.S. attempts to link the Coupang issue as a prerequisite for nuclear cooperation in these talks, South Korea will face a very difficult choice between trade concessions and security interests. Conversely, if South Korea can successfully separate the two agendas, the room for negotiation will be significantly widened.

Second, the speed at which the narrative surrounding Coupang spreads within the U.S. Congress. Currently, the U.S. House report is an 'interim report,' and the final report has not yet been released [3][5]. The content and severity of the final report, and whether the U.S. Congress will pursue additional legislative actions or hearings based on it, are important variables. In particular, if the collective actions of Republican lawmakers expand, this issue could evolve beyond inter-agency consultation channels into a tool of trade pressure at the congressional level.

Third, South Korea's capacity for diplomacy and public relations towards the U.S. Congress. Currently, there is a tendency for Coupang's one-sided claims to spread without verification within the U.S. political sphere [2][8]. The extent to which the South Korean government and National Assembly can effectively convey the facts and counterarguments to the U.S. Congress and administration will be a crucial turning point in the issue's development. While the Ministry of Foreign Affairs has stated that it "plans to closely communicate with the U.S. Congress and administration to continuously correct the facts" [8], this could remain at a declarative level without substantial lobbying capabilities and networks.

Fourth, the progress of domestic legal and administrative procedures related to Coupang. The South Korean government asserts that the investigation into Coupang is being conducted lawfully and non-discriminatorily [1][6]. However, if sanctions are imposed by relevant agencies such as the Fair Trade Commission and the Personal Information Protection Commission, the intensity of the U.S. pressure could vary depending on the content and severity of these decisions. If the sanctions against Coupang are perceived as significantly harsher compared to similar domestic companies, it could lend weight to the U.S.'s claims of discrimination. Conversely, if procedural fairness is clearly demonstrated, South Korea's counterarguments will be strengthened.