The Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju this week is unfolding under the shadow of a turbulent global trade order. What was conceived three decades ago as a forum to champion open markets and cooperation among Pacific Rim economies now finds itself wrestling with new protectionist currents and geopolitical tensions. For host South Korea, the challenge is daunting: to preserve the spirit of free trade while navigating the unpredictable crosswinds stirred by U.S. President Donald Trump’s tariffs and China’s growing assertiveness.
When APEC was established in 1989, its vision was to harness the collective economic power of its members—now 21 in number, accounting for more than half of the world’s trade—to build bridges across the Pacific. Over time, it became a symbol of globalisation’s promise, drawing together nations that otherwise competed fiercely. Through APEC’s informal framework, tariffs were lowered, communication improved, and the concept of interdependence gained legitimacy. Yet the 2025 edition bears little resemblance to the optimistic gatherings of earlier decades.
Trump’s aggressive trade policies have disrupted this cooperative foundation. His administration’s sweeping tariffs and unilateral measures have strained relationships with both allies and rivals. For countries like South Korea, Japan, and Australia—long aligned with Washington—the new U.S. approach marks an uncomfortable departure from the rules-based order that they helped build. The Gyeongju summit, therefore, is less about celebrating progress and more about damage control: an attempt to keep dialogue alive in an era of transactional diplomacy.
The geopolitical theatre surrounding APEC is equally complex. The much-anticipated meeting between Trump and Chinese President Xi Jinping in Busan threatens to eclipse the main event. The two leaders, locked in a prolonged trade war, are expected to engage in a tense exchange over tariffs, technology controls, and rare earth exports. Their confrontation is not just an economic duel but a contest for global influence. For South Korea, positioned between these two giants, the summit represents an opportunity to demonstrate deft diplomacy—asserting its independence while avoiding the perception of partisanship.
Trump’s reassertion of American economic nationalism has upended assumptions that once anchored the forum. The United States, once the torchbearer of free trade, now advances policies that seem at odds with APEC’s founding ethos. China, sensing an opening, has sought to recast itself as a defender of the global economic order. Yet its credibility is limited by its own protectionist practices and opaque governance. Between these poles, South Korea’s role as convener is delicate: it must urge cooperation without alienating Washington, while discouraging Beijing from exploiting the vacuum.
The economic stakes are high. Tariffs imposed by the Trump administration—particularly the cumulative 50 per cent duties on some goods—have already cut deep into Asia’s export engines. South Korea and Japan, whose industries depend heavily on U.S. markets, are scrambling to negotiate exemptions and offsets. Their pledges of investment in American industries reveal both the extent of their dependence and the limits of their leverage. Seoul’s attempt to replace upfront payments with loans and guarantees underlines a broader anxiety: that excessive concessions could trigger financial instability at home.
In this fraught environment, APEC’s traditional consensus-building function is under strain. South Korean Foreign Minister Cho Hyun has acknowledged the difficulty of issuing a joint declaration explicitly endorsing free trade. The divergence of national interests has rendered unanimity elusive. Instead, Seoul is pushing for a more general statement invoking peace, prosperity, and shared responsibility in the Pacific—a symbolic compromise that reflects both the diminished expectations and the enduring importance of dialogue.
Beyond trade disputes, this year’s APEC agenda will touch on the transformative forces reshaping the global economy. Artificial intelligence, demographic decline, and the changing nature of work are expected to feature prominently. For South Korea—a nation that has built its reputation on technological innovation—these topics provide an avenue to steer the conversation toward future-oriented cooperation. In an age when geopolitical competition dominates headlines, the inclusion of issues like AI governance and ageing societies offers a rare moment of constructive engagement.
APEC’s real value may lie not in the concrete outcomes it delivers but in its persistence as a platform for conversation. Its loose, non-binding structure allows rivals to coexist and communicate without the pressure of formal agreements. Even in the absence of breakthroughs, such gatherings reinforce the notion that economic interdependence cannot be wished away. As Trump’s tariffs bite and China manoeuvres to fill the leadership void, the presence of leaders from across the Pacific serves as a quiet reminder that globalisation, though bruised, remains alive.
For South Korea, hosting APEC in 2025 is a test of both diplomacy and vision. The nation must reconcile its identity as a U.S. ally with its growing interdependence with China. It must also lead by example—advocating openness even as major powers turn inward. Its approach to the summit reflects a nuanced understanding of its position: neither a great power nor a passive observer, but a middle state capable of building bridges through dialogue and shared interests.
The world that gathered in 2005, the last time Seoul chaired APEC, was buoyed by optimism about a liberal international order. Two decades later, that optimism has eroded, replaced by mistrust and strategic rivalry. Yet if APEC can still convene leaders who disagree on almost everything else, it retains a kind of quiet power. The Gyeongju summit may not deliver sweeping resolutions, but its symbolic message endures: in a fragmented world, the effort to talk—even amid discord—remains the most vital act of cooperation.