For the first time, the United States has identified South Korea’s defense offset program as a trade barrier. 

The Office of the U.S. Trade Representative issued its 2025 National Trade Estimate Report on Foreign Trade Barriers on Monday, two days before the Trump administration was set to roll out reciprocal tariffs on all U.S. trading partners. 

The report said the Seoul government has pursued policies that prioritize local technology and products over foreign defense technology through its defense offset program.

It added that an offset obligation may arise for a foreign contractor should the value of a defense contract with Seoul exceed ten million dollars.

Under South Korea’s defense offset program, foreign defense contractors participating in major government procurement projects are required to fulfill certain obligations, such as providing technology transfers and logistical support.

The report did not mention any specific cases involving South Korea’s defense offset program.

The U.S. will calculate its new reciprocal tariffs on the basis of tariffs, nontariff barriers to trade and other factors.