Building on trusted technology partnerships, Washington and Seoul have an opportunity to chart a new path forward, maximizing joint access to one of the fastest-growing markets—the digital economy. 

The United States and South Korea have long shared robust economic relations, anchored in advanced industries—from semiconductors to civil nuclear energy—that have produced mutual industry-to-industry gains. Built on techno-industrial partnerships, digital trade is swiftly becoming the next frontier of that cooperation. 

Cross-border data flows, cloud computing, e-commerce platforms, and artificial intelligence (AI) are not only engines of growth but also pillars of national competitiveness. As the United States and South Korea seek to secure long-term leadership across critical technology-related sectors, including semiconductors, critical minerals, and advanced manufacturing, it is crucial that the two nations get digital trade policy right.

US-South Korean Trusted Tech Partnerships

Undoubtedly, South Korea is one of the United States’ most important trusted technology and trade partners. In 2025, US-South Korean total bilateral trade goods and services were estimated at $241.2 billion. Looking forward, the two nations aim to advance partnerships into critical and emerging innovation areas on AI, biotechnology, quantum, and even space exploration and global positioning technologies. 

Fast rising among these is the digital market: Digitally delivered services are growing annually at an “average rate of eight percent, nearly twice as fast as goods trade.” Growth and diversification of digital ecosystems offer new opportunities for expanded US and South Korean cross-border engagement in crucial digital service markets. As global trade shifts toward advanced technologies and AI innovation, the United States and South Korea increasingly recognize the strategic necessity of digital and technology market access. As such, both nations must work to establish bilateral frameworks to ensure continued cooperation and strengthen industry-to-industry relations. 

In October 2025, US President Donald Trump and South Korean President Lee Jae-myung concluded the US-South Korea Technology Prosperity Deal, which emphasized expanded trusted technology partnerships focused on accelerating development and deployment in ground-breaking frontiers from AI and quantum to biotechnology innovation. Later, during the Trump-Lee summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) in November, both leaders emphasized the importance of trade and technology cooperation. 

Furthermore, under the US-South Korean trade deal, Seoul committed to providing $150 billion to rebuild the US domestic shipbuilding industry, alongside an additional $200 billion in investments (capped at $20 billion annually) across additional crucial sectors over the next ten years. After fast-track deliberation, the South Korean legislative body passed the Special Act for Korea-US Strategic Investment Management in March 2026, establishing the legal and practical steps toward fulfilling its initial investment commitments across industry, technology, and digital innovation systems. 

Realizing bigger opportunities in digital trade relations, however, will require more than tension-reducing diplomatic rhetoric. Building a shared strategic vision for digital trade will demand deliberate efforts to establish constructive public-private forums and reconcile emerging regulatory frictions amid mounting geoeconomic uncertainties. 

Rising Friction in the Digital Economy

Despite these successes, friction points continue to plague US-South Korean digital commercial relations. While both Washington and Seoul recognize the importance of open, accessible, and interoperable digital ecosystems, rising policy disputes risk fragmenting this shared vision. If left unaddressed, such tensions could harden into structural barriers, undermine market access, and, ultimately, weaken the broader alliance.

Under the Trump administration, senior US officials have repeatedly stressed mounting concerns about South Korea’s regulatory barriers for digital services and products. Recently, the 2026 National Trade Estimate Report detailed several areas of concern, covering network usage fees, platform regulation, data localization, and cloud services. Amid ongoing debates, Washington views these regulatory measures as non-tariff barriers; whereas, according to policymakers in Seoul, such regulatory frameworks are rooted in broader concerns over data security, market fairness, and digital sovereignty. 

South Korea’s push for greater oversight of digital platforms reflects legitimate domestic concerns. Policymakers in Seoul are responding to growing pressures from small and medium-sized enterprises (SMEs), content providers, and consumers who argue that dominant platforms exert disproportionate influence over pricing, visibility, and market access. Such domestic debates are not trivial issues but, rather, speak to broader questions of fairness, competition, and digital sovereignty.

US and South Korea Diverging Perspectives and Shared Risks

Yet, from Washington’s perspective, the cumulative effect of such policy changes raises concerns about regulatory overreach and discriminatory environments for US companies. Globally positioned US tech giants and e-commerce firms—such as Google, Meta, Apple, and Coupang—operate across international markets and are particularly sensitive to ambiguous standards and ex ante obligations, which could introduce uneven regulatory enforcement and long-term compliance burdens. 

These recent strains are not unique to the US–South Korea economic partnership. Around the world, governments are grappling with how to balance crucial market openness with demands for strengthening oversight and regulatory controls in the digital economy. As treaty allies with deeply integrated supply chains and shared interests in emerging technologies, Washington and Seoul cannot afford for regulatory misalignment to erode trust or constrain cross-regional cooperation.

For this reason, the Lee administration has extended diplomatic overtures to alleviate rising US concerns over digital trade barriers. Under the US-South Korea Joint Fact Sheet, South Korea committed to ensuring US companies do not face discriminatory barriers and to facilitating cross-border data flows. Seoul’s efforts indicate a willingness to align more closely with US expectations on digital trade while promoting more open and predictable regulatory environments for cross-border data and services.

As an example, in February, South Korea reached a long-pending agreement with Google to allow the conditional export of high-precision 1:5,000-scale map data, while maintaining safeguards to protect security-sensitive information. Previously, South Korean government officials had limited cross-border access to 1:25,000-scale maps, citing national security concerns over foreign companies accessing and exporting map data, which could include South Korean military bases and defense installations vis-à-vis North Korea. The new agreement demands a strong framework for public-private cooperation, allowing for the expansion of US market access while addressing data protection concerns. 

A Public-Private Digital US-South Korea Trade Framework

To address these concerns, Washington and Seoul’s path forward lies not in divergent market ideologies but, rather, in aligning digital regulation and market access policies that maximize the two countries’ techno-industrial partnerships. A bilateral digital trade framework could serve as a critical mechanism for achieving this balance. Such a forum is unlikely to eliminate policy differences, but would instead serve to formalize consensus on shared principles—non-discrimination, transparency, and the free flow of data—while preserving space for legitimate domestic regulation. 

Building on the US-South Korea Technology Prosperity Deal, Washington and Seoul must work together to institute policies that enable complementary partnerships within the digital market ecosystem. Importantly, a formal digital trade framework—one that features active public-private engagement—would provide a structured forum for ongoing dialogue, allowing both sides to address disputes before they escalate. Careful calibration could be given to balancing legitimate calls for expanding market access and preserving each country’s regulatory priorities. Bridging this gap will not be easy, but it could alleviate tensions in the near term and, with sustained engagement, target future-oriented policies to mitigate policy divergence down the road.

Most importantly, for the US-South Korean partnership, digital market coordination is not just economic—it is vital to competing with China’s model of digital governance. Digital trade is no longer a peripheral issue; it is central to economic security, technological leadership, and alliance resilience. Failure to act will cede ground to US competitors and adversaries at a pivotal time for digital market development. As debates intensify over data governance, platform responsibility, and digital competition, the absence of clear rules risks ceding influence to less democratic governance models. 

By working together, Washington and Seoul can advance a vision of the digital economy that is both open and equitable—one that supports innovation while addressing legitimate commercial and societal concerns.

About the Author: Kayla Orta

Kayla T. Orta is a nonresident fellow in the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security. A former US Department of Defense NSEP Boren Scholar to South Korea, her expertise lies in US-Indo-Pacific and US-Korean foreign relations, especially at the intersection of security and technology policy, including nonproliferation, nuclear diplomacy, and civil nuclear energy markets. Most recently, she worked as the Senior Associate at the Wilson Center’s Hyundai Motor-Korea Foundation Center for Korean History and Public Policy. 

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