Allies in Transition: Recasting the United States – South Korea Alliance for a Competitive Era

CSDS POLICY BRIEF • 4/2026

By Henry Haggard

3.2.2026

Key issues

• The US-ROK alliance is transforming, with higher Korean defence spending and nuclear-submarine cooperation shifting it beyond Peninsula-centric deterrence;
• The alliance agenda is widening and regionalising, integrating China deterrence, defence industry ties, high-tech security, supply chains and energy;
• Political and economic frictions are the main risks, as Trump-Lee dynamics and disputes over trade, technology or China could strain alliance management.

Introduction

The future of the United States (US)-Republic of Korea (ROK) alliance is bright. President Trump has redefined the meaning of the term “alliance” from that of past presidents, and while President Lee values the importance of the relationship, he is, first and foremost, a nationalist rather than a globalist. Despite the frictions and tensions that have emerged and been managed in recent months and that will continue to arise, South Korea does and will play an essential role in the US security approach to the Indo-Pacific. Notwithstanding potential political differences between the countries, South Korea has one ally, the United States, and Korea plays a key role as a robust, defence and industrial power miles from China and next to North Korea. As stated in the 23 January 2026 US National Defense Strategy (NDS), ‘South Korea is capable of taking primary responsibility for deterring North Korea with critical but more limited U.S. support‘. The US strategy highlights South Korea’s defence industrial base (DIB) and names Korea a partner capable of deterring an ever more provocative North Korea and a militarily growing China.

In the wake of the 25 August 2025 “Trump-Lee Summit” meeting in Washington and the State Visit of President Trump to Gyeongju, South Korea, on 29 October 2025, the two leaders put out a statement on 13 November 2025 that announced a “new chapter” in the US-ROK Alliance. While in many cases statements do not contain much that is new, in the wake of the two leaders’ meetings in 2025, 2026 will indeed see the alliance modernise, evolve and change significantly. 2026 will be a year of transformation for the alliance, with South Korea increasing its defence budget to 3.5% of GDP, with a rise of 8% year-on-year until reaching that goal. This budgetary change, along with the commitment to purchase US$25 billion in US military equipment, will dramatically alter the pace of integration of the two militaries and the modernisation of the South Korean military. The aim of this CSDS Policy Brief is to unpack and analyse the evolving alliance.

Deepening the alliance

Overall, the long-term future of the US-ROK alliance is regional, modernised, transnational and high-tech. The core focus of the alliance will move further away from deterrence against North Korea, and become more modern, regional and focused on overall deterrence from various threats, both national and transnational. It will also develop into a more functional and transnational alliance that seeks to support supply chain security, energy security and cyber security, just as much as to support the safety and security of the Peninsula from the North Korean military threat. The challenge for South Korea is to navigate this transformation while accommodating the strong traditionalist school of conservative (in an alliance sense, across all parties), pro-alliance Koreans who see the alliance as the foundation of defence against North Korea and believe that anything that detracts from that purpose could increase the Korean people’s insecurity.

For the US, the challenge under the current administration is to acknowledge value from the alliance, while continuing to demand more and continuing to develop the Trump doctrine vis-á-vis China and the region, and determining how South Korea fits into the China strategy. For South Korea to achieve this balance, moves like the decision to acquire (or co-build) a nuclear submarine from the US will be central. For the United States, as long as South Korea increases its defence budget as pledged, and continues to invest in the US through military purchases as part of the overall US$350 billion overall investment commitment, the conditions could remain in place for the two countries to find the terms of the alliance and alliance management vastly different at the end of the Trump and Lee administrations.

While the above frame lays out the potential policy trajectories for the alliance, the near-term success of the relationship hinges on the personal relationship between Presidents Trump and Lee Jae Myung. President Lee’s ability to stay in the “good” camp for President Trump will have a significant impact on how turbulent the inevitable ups and downs will play out between the two countries. The two of them present ideological flexibility and national, sovereigntist approaches to governance that mean they could step away from historical precedent in significant ways as it relates to the alliance, as well as how the two countries relate to China and the Indo-Pacific region. Korean government officials point out that President Lee’s first diplomatic objective is to maintain a stable relationship with President Trump and the US. His second goal is to improve relations with China in order to support economic growth, all while avoiding historical arguments with Japan. Thus far, President Lee has achieved all of his diplomatic objectives far better than most could have anticipated. To hit high marks with China and Japan at the same time has proven difficult for most of President Lee’s predecessors, so to follow up a successful visit to Beijing with a drum session with the Japanese Prime Minister days later is, if not unprecedented, certainly rare.

President Trump’s “America First” and Western Hemisphere-centric approach means that his focus on South Korea could be episodic and seen largely through either the China or the investment-in-America lens. There is even some concern in South Korea that President Trump could, if a “big deal” were possible with China, turn away from allies like South Korea and Japan. Although President Trump may not necessarily see the intrinsic value of the alliance with South Korea, most, if not all, of the administration’s key figures see Korea’s central role in the competition with China, both in terms of investment and economic supply chain security and defence and deterrence. Because of the overall administration view of the high value of Korea to the United States, it is unlikely that President Trump will trigger a wholesale rewriting of the US approach to the alliance or fundamentally alter the US commitment to Korea. However, it is reasonable to expect that President Trump could buffet the overall relationship with tariffs or other aggressive measures that, heretofore, had not been deployed against allies. Even if not in the military or security realm, such actions could affect how Koreans view the relationship and affect cooperation between our governments.

On the Korean side of the leadership equation, President Lee appears to have found a method to manage President Trump’s approach without triggering adverse reactions either in Korea or amongst the Trump team. That said, the conflict over the digital economy could prove challenging as President Lee is liable to stand up for local champions like Naver as the US puts pressure on the Korean government to treat its tech firms fairly. President Lee is currently poking the bear with attacks on the leading US investor in Korea, Coupang (known as the Amazon of Korea), and his approach and the approach of his government could make this issue not just a commercial issue, but a bilateral irritant. President Lee has proven that in his flattery and management of President Trump, and his management of tricky historical issues and his overall approach to Japan, his flexibility could lead him to buck the traditional, staunch pro-US approach past Korean presidents have taken if he perceives that the Korean people would support him standing up to President Trump and the US over digital or other policy.

We are currently seeing President Lee’s approach play out as he attacks Coupang and encourages the National Assembly, the Korea Fair Trade Commission (KFTC) and the prosecutor’s office to target Coupang due to a data breach. President Lee’s actions appear driven in part by a long-standing desire to hold Coupang to a higher standard, given its success as a US firm in Korea, and the perceived notion that Coupang does not pay its share of taxes or profit in Korea. More likely, this is President Lee taking advantage of the data breach to chip away at Coupang’s dominant position in the e-commerce and delivery space. While this is an economic issue, if President Lee continues to target Coupang, there could be consequences for his ability to manage President Trump and, therefore, the alliance. It seems that President Lee is counting on his forward-leaning stance to support US shipbuilding, to purchase defence articles and Boeing jets, along with Korean businesses’ commitment to invest US$20 billion per year in the US, to give him room to take aggressive action against Coupang. This seems like the type of action that could harm the alliance and also deter US firms from investing in Korea.

Modernisation is the slogan of transformation of the alliance currently, and while discussions will continue to determine whether modernisation refers to capabilities, policies, force structures, OpCon transfer, all of the above, or none of the above, the US and Korea have agreed to embark on a nuclear submarine project. In one decision (that may or may not have followed extensive National Security Council or interagency deliberation) to offer South Korea the ability to reprocess nuclear material and to build nuclear submarines, the alliance has been modernised in its scope and approach. The nuclear submarine, in President Lee Jae Myung’s own words, is made for long-term and long-distance deployment and therefore could help support US regional efforts and deter China. Observers have sought to downplay President Lee’s remarks as a “mistake”, but the fact is, his remarks ring true as the nuclear submarine is most useful as a deterrent and in conflict away from the Peninsula. The capability automatically makes Korea a more regional and even global military actor.

As President Lee sought to downplay any proliferation concerns, he expanded the mission and ambition for the South Korean military, and this could lead to the most profound modernisation of how the two countries talk about China and the Indo-Pacific. While the first Korean nuclear submarine may not deploy for 10+ years, in the meantime, discussions could begin about how the submarine will transform how the US cooperates with the ROK. Surprisingly, China has not reacted to the nuclear submarine deal in a move that shows remarkable restraint by Beijing. Since there are many details to be ironed out to finalise the deal, let alone the time to determine where the subs will be manufactured, China appears to have decided not to upset warming relations with Korea. Perhaps Korea has benefited from China’s ongoing tensions with Japan.

China has, if not influence, an impact on any decision by South Korea (or the US, for that matter) and one can expect China to have a view on the breakthrough decision by Korea and the US to modernise their alliance through submarine cooperation. In 2015, after the United States deployed its THAAD air defence system, China reacted by imposing an unofficial boycott on certain companies, reducing the number of tourists who travelled to South Korea, and limiting Korean entertainment content in China. This had a ~US$10 billion impact on the South Korean economy and, perhaps even greater effect on souring how Koreans viewed China. China’s justification for its reaction to the deployment was that the THAAD battery threatened its strategic security. While China’s position was hardly defensible regarding the THAAD, which was first and foremost deployed to defend South Korea and to deter North Korean provocations, the nuclear submarine is clearly and explicitly for playing a greater regional role, deterring China, and cooperating with the US in the South China Sea. Military experts note that South Korea does not need a nuclear submarine to defend the Peninsula or even for a possible conflict with North Korea, but only to take a greater regional role, or participate in a possible conflict with China in the Taiwan Strait or the South China Sea.

Regionalisation meets globalisation

In addition to the move toward nuclear submarine cooperation potentially causing friction with China, other trends for South Korea and the alliance require management and further oversight. Coordination with Japan on the defence front continues to advance, and President Lee’s bold decision to visit Japan before the US, and to visit again early in 2026, has set the Korea-Japan relationship on a surprisingly strong track, especially considering President Lee’s past negative statements about Japan. For a president who suggested in the past that Korea’s military buildup was to defend against a potential threat from Japan to transform into a liberal president who not only takes on Yoon’s conciliatory approach to Japan, but goes one step further with a charm offensive, is remarkable and augurs well for Korea’s expansion into more trilateral regional cooperation with Japan and the US.

While South Korea (and Japan) did not attend the 2025 NATO Summit, the Asia-Pacific 4 (AP4) (Korea, Japan, Australia, New Zealand) continues to expand and develop. Alliance conversations between the US and ROK generally focus on geographic deterrence and areas of operation (i.e. North Korea), but conversations at NATO rightly pull Korea into discussions about how to manage transnational threats and the growing global threat posed by China and Russia. As the US and ROK expand their coordination bilaterally through the nuclear submarine-related talks and further define the “modernisation of the alliance”, NATO AP4 discussions could offer a road map for how to expand and modernise. Russia and North Korea are boosting the trend toward a more global alliance perspective with their increased cooperation, including the deployment and death of North Korean troops in Russia. Even as the US-ROK alliance becomes more global and transnationally-focused, an expanded and more global, Russia-supported, North Korean threat will pull South Korea and the US-ROK alliance discussions naturally into a focus on European security matters.

Transnational deterrence

The US-ROK alliance will continue to become more of a high-tech alliance and less about deterring the military threat that North Korea poses. This high-tech alliance will evolve through greater defence industry cooperation as well as overall economic integration, investment and cooperation as the industries of the future – from drones, to AI, to pharmaceuticals, to quantum and the Internet of Things (IoT) – will become more and more dual-use as deterrence becomes more about protecting digital infrastructure and data than about automated artillery. Here, the alliance is poised to take off, boosted by the extensive investments Korean firms have made in the United States in a variety of sectors, most notably in semiconductors. SK Hynix and Samsung have pumped tens of billions of dollars into fabs that will produce chips for Nvidia and the next generation leaders of the AI sector in the US.

As the IoT becomes more present in the grocery store, in our homes, in cars, etc., our data becomes more and more valuable to companies and to our military foes. South Korean companies offer viable alternatives to Chinese competitors – for example, the two leading electronic shelf label companies are Chinese and Korean, and we can anticipate the leading Korean manufacturer, SoluM, could soon be ubiquitous thanks to its ability to safely handle our data and deliver a quality service. As our phones connect us to our stores and to our cars, it will become just as important to keep Chinese technology out of our refrigerators and our grocery stores as it is to keep Huawei out of our physical digital infrastructure or BYD cars off our highways. The US-ROK alliance and its future safety rely just as much on the relationship with Hanwha and Hyundai for military equipment as they do on the relationship with companies like SoluM that will support advanced connectivity in our cars and our cereal aisles.

Finally, in addition to high-tech cooperation, energy security is critical. South Korea is the top importer of US Liquefied Natural Gas (LNG) and will continue to rely on the US for power, and the energy relationship of the two countries will become more and more essential to the alliance and the national security of each nation. South Korea not only relies on the US, but South Korea also could power the United States future through cooperation in the civil nuclear space, shared efforts to build a critical minerals supply chain that does not rely wholly on China, and through investments in US infrastructure as well as energy-related manufacturing. The energy relationship will drive the economic and security alliance and help secure support for the alliance and the relationship more broadly, as the relationship and our security depend more on technology, AI and advanced manufacturing.

Conclusion

The prospects for the US-ROK alliance in 2026 are exceptionally strong, given the fact that the two leaders have successfully navigated a period of uncertainty related to trade, tariffs and investment and have concluded a significant agreement to change the nature of our alliance through investment, shipbuilding co-production and a greater level of trust in the nuclear sphere to allow for South Korea to build nuclear submarines. The investment agreement, increased defence budget in Korea, pledge to buy US equipment and agreement to allow nuclear submarines will catalyse the significant evolution and even transformation of the alliance in 2026 and beyond.

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