SEOUL, July 23 (AJP) - Nearly half of the South Korean companies with operations in North America expect a coming overhaul of the region's main trade pact to disrupt their business, according to a survey released this week, after Washington declined to renew the agreement in its current form and opened a decade of uncertainty across one of South Korea's biggest export markets.
The finding comes from a poll of 43 South Korean firms with a presence in the United States, Mexico or Canada, conducted in early June by the Korea International Trade Association (KITA). Those three countries took in $145 billion of South Korean exports last year, more than a fifth of the national total and up from $81 billion a decade earlier, a rise of 79 percent. South Korean direct investment there grew almost as fast, reaching $28.6 billion in 2025, up 85 percent from 2016.
At issue is the United States-Mexico-Canada Agreement (USMCA), the deal that governs tariff-free commerce among the three countries. On July 1, the United States told its two partners it would not extend the pact in its present shape. The decision stopped short of ending the agreement, but it set the region on course for years of annual renegotiation.
USMCA took effect in 2020, replacing the North American Free Trade Agreement (NAFTA), the 1994 accord that first bound the three economies into a single tariff-free market. Unlike NAFTA, the newer pact carries what is known as a sunset clause. It requires the partners to review the deal every six years and decide whether to keep it, and it expires in 2036 unless all three governments agree to renew.
July 1 was the first of those reviews. Because Washington withheld its consent, the pact now faces a review every year until 2036, and each round is a chance to reopen its core rules. The agreement stays fully in force in the meantime, and a renewal remains possible at any time, but companies across the continent must now plan around an unsettled decade.
The report, from the trade research arm of the Korea International Trade Association (KITA), set out the main points of contention. Support for keeping the deal runs strong across the three countries, but the United States has pushed for changes in several areas, a stance the report linked to the trade agenda of the second Trump administration. Mexico and Canada have leaned toward preserving the pact as it stands.
The largest of the disputed issues is a tightening of rules of origin. These are the requirements that decide how much of a product must be made within North America for it to move across borders tariff-free. Washington wants a higher share of a car and its parts built in the region to qualify, along with a new standard for steel, which would have to be melted and poured in North America rather than merely finished there.
Other flashpoints include tighter curbs on goods from non-market economies, a label widely understood to target China, which the United States says routes products through Mexico to reach the North American market. The talks also cover cooperation on economic security and critical minerals, stricter customs and certification checks, tougher labor and environmental enforcement, and changes to digital trade rules.
South Korea is not a party to the agreement. Its exposure runs through the many Korean manufacturers that build cars, batteries and other goods in North America, or that supply parts and materials to factories there. A tighter rules-of-origin regime could force those firms to buy more of their inputs locally or lose their tariff-free treatment.
In the survey, companies named the rules of origin as their leading concern. Stricter content requirements for automobiles and parts drew the most worry, cited by 27.9 percent, followed by steel and aluminum at 20.9 percent and other manufactured goods at 9.3 percent. Almost half, 48.8 percent, said the reviews would have a considerable effect on how they operate.
Firms are already weighing how to respond. The most common plan, cited by 41.9 percent, was to build alternative supply chains inside North America. About a third said they would look to step in as new suppliers as the regional supply map is redrawn, and 27.9 percent were considering fresh investment in the United States.
The agreement is unlikely to collapse outright, because it anchors North America's industrial supply chains, said Jeon Yoon-sik, a senior researcher at the association, but a drawn-out review makes wider uncertainty in the local business environment unavoidable.
"The stronger rules on origin and supply chains raise the threat of higher costs," he said, "but the chance to move in as an alternative supplier could also grow, so companies need to examine the origin and supply chain of each product and build a response system in advance."
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