The latest model suggests that U.S. companies could face severe economic losses if South Korea moves forward with a contentious bill aimed at limiting transactions with certain American firms. There’s concern among lawmakers that South Korea’s current government is increasingly aligning with China.
The Online Platform Fairness Act, introduced by the Korea Fair Trade Commission (KFTC), is gaining traction in South Korea, buoyed by the support from President Lee Jae-myung. An analysis by the Competere Foundation reveals that the U.S. could see a staggering $525 billion drop in economic activity over the next decade due to this legislation, with significant losses anticipated in California ($123 billion), Texas ($48.7 billion), New York ($33.9 billion), and Washington ($27.4 billion).
“South Korea has been a strong ally and an economic success for the U.S., so it’s alarming to see ongoing restrictions on American companies, like the extensive ban on Google Maps,” remarked California Republican Rep. Darrell Issa. “I’m troubled by how the current Trade Commission seems to echo the more extreme approach associated with Lina Khan’s FTC instead of honoring the free-market values that have fostered our collaboration.”
Issa previously expressed, back in April, that the direction of South Korea’s leadership suggests a close connection to China, raising red flags for many.
Yoon Seok-yeol, previously elected president from the conservative People’s Power Party in 2022, was impeached a couple of years later, mainly due to his martial law decision.
In a twist of events, Lee, who narrowly lost to Yoon in 2022, won the presidency in 2025. His party now holds a significant majority in South Korea’s National Assembly, emphasizing a notable shift to the left.
The proposed legislation would broaden the KFTC’s powers, which, some lawmakers argue, has been unfairly harsh on American businesses.
“The landscape for U.S. companies in South Korea is becoming less favorable,” stated Shankar Singam, an economist and Competere Foundation CEO. “These impending regulations will only worsen conditions.”
Former Rep. Chris Stewart also voiced concerns over South Korea’s increasing regulatory challenges for American companies, highlighting potential adverse effects across various sectors. “The ongoing pressure on U.S. businesses is more than just trade—it’s a strategic blunder; every rule that hinders innovation gives more leverage to Chinese firms,” he added, pointing out the broader implications if U.S. investments dwindle.
In early June, experts criticized South Korea’s shift towards a leftist stance in its relationship with the U.S. An editorial noted troubling actions, including allegations regarding the investigation of a U.S. air base.
Specifically, the focus of this investigation has been Coupang, a U.S.-based tech company, which recently endured a hefty fine for data breaches—reportedly the highest such fine in South Korea.
The investigation, linked to a data theft incident involving a former employee, was defended by South Korean officials as being consistent with how local firms would be treated in similar situations.
Additionally, in April, over 50 U.S. lawmakers reached out to the South Korean ambassador, expressing their worries over “discriminatory” business practices that could further complicate relations.
The letter referenced a report indicating that regulatory tightening could result in a staggering $1 trillion loss across both economies over the next decade. American families might face nearly $4,000 in losses as a consequence, underscoring the pressing need for dialogue on trade relations.
