“Pizzo!” they reply in unison, rolling their eyes. “Pizzo, pizzo!”
It means extortion. In recent months, South Korea has had its own crash course in “pizzo.” Under Donald Trump, the United States has shown little hesitation in using methods that bear an uncanny resemblance to those of organized crime. This autumn, one of Washington’s closest allies in Asia has been subjected to unprecedented pressure.
The demand could not be clearer: pay $350 billion upfront in U.S. investments, or face punitive tariffs that could destabilize South Korea’s economy.
In Seoul, the negotiations are described as both humiliating and unrealistic. Trump’s demand amounts to roughly a third of the country’s foreign currency reserves—an impossible figure for any South Korean government to justify to its citizens. Yet the negotiators cannot simply walk away. The alternative—an outright trade war—might prove almost as costly.
Trump has turned tariffs and “deal-making” into the core of his foreign policy. He claims South Korea has taken advantage of the U.S. for decades and insists it is time to “correct the imbalance.” By imbalance he means Seoul’s trade surplus, largely the result of car exports, semiconductors, and steel.
In reality, the numbers are modest compared with America’s deficits with China or the EU. But for Trump, symbolism matters more than statistics. He wants to project the image of a strongman who can bend allies to his will.
For South Korea, this is a classic dilemma. It depends heavily on the U.S. for security, caught as it is between a hostile North Korea and a rising, assertive China. At the same time, it is a technological powerhouse with global ambitions, determined not to look like a submissive client state. That tension has slowed the talks, and few believe a final deal will be reached before Trump lands in Seoul.
That landing is scheduled for Wednesday.
A leaked report from South Korea’s finance ministry illustrates the problem. Meeting the $350 billion demand would drain state liquidity and risk destabilizing the won.
One alternative is to accept a 25 percent U.S. tariff instead of the reduced 15 percent Trump is offering. The extra ten percentage points would cost South Korea an estimated $20–25 billion annually. Over a decade, that adds up to $200–250 billion—still far below Trump’s $350 billion demand.
Many economists therefore argue it would be cheaper to endure higher tariffs. But the political risks are considerable. Defiance could provoke Trump into new reprisals. His negotiating style is unpredictable: resistance is often met with fresh threats, additional sanctions, or even personal insults that poison diplomatic relations.
Trump frames the demands as a test of the alliance. “If South Korea really wants us to protect them, they must also show they are on our side economically,” he declared recently. The remark captures his approach to diplomacy: alliances reduced to transactions, security treated as a commodity.
South Korean commentators note that Washington has applied pressure before. In the 1970s, Richard Nixon threatened to withdraw troops unless Seoul paid more for its defense. Both George W. Bush and Barack Obama pushed for greater burden-sharing. But no U.S. president has ever imposed such sudden and outsized demands as Trump.
His counterpart, President Lee Jae Myung, was sworn in only this June and has faced a steep learning curve. During his later visit to the White House, he struck a conciliatory tone. Yet he has made clear that South Korea simply cannot hand over $350 billion “upfront” and in “cash”—meaning as a one-off payment, immediately.
Negotiations continue behind closed doors. According to South Korean media, the focus has shifted toward spreading the investments over time, perhaps through a mix of direct capital flows, loan guarantees, and technological partnerships. That would make the figure more manageable and allow Seoul to present any deal as a compromise rather than capitulation. Still, there is little doubt about who holds the stronger hand.
South Korea can take some comfort in not being alone. Japan, India, and the EU have all faced similar ultimatums from Trump and endured his scolding in turn. What makes Seoul’s case unique is its military dependence on Washington. No other ally lives beside such a hostile neighbor as North Korea, a regime still developing missiles and nuclear weapons.
The U.S. has maintained a military presence in South Korea since the Korean War (1950–1953). Today some 28,000 American troops are stationed there across fifteen major bases. South Korea itself fields half a million soldiers but, unlike the U.S. and North Korea, it has no nuclear weapons.
So what is the likely outcome?
Most expect Trump to arrive without a completed agreement. Instead, the two sides will announce a “preliminary understanding” to save face. Trump will claim he forced South Korea to promise “billions and billions of dollars” in investments, while Seoul will argue it has gained time and flexibility. The real bill will only emerge months or years from now.
In the meantime, the high-wire act continues. South Korea must balance economic logic against geopolitical necessity, while Trump squeezes as hard as he can. A full rupture is unlikely—Seoul simply cannot afford it.
Mafia methods, many say. Perhaps that is the most fitting description. For South Korea, this is a brutal reminder of how difficult it is to be both an economic success and a small state in a world where great powers make the rules—and demand payment.
faeroevi@online.no
