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(Bloomberg) -- Less than two months into his presidency, South Korean leader Lee Jae Myung is facing an early diplomatic and economic test, as his top negotiators struggle to make headway in trade talks with the US before higher levies kick in next week.

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South Korean negotiators faced a series of canceled meetings this week, a setback in their push to finalize a trade deal ahead of the looming Aug. 1 deadline, when across-the-board tariffs on US imports of Korean goods are set to rise to 25% from 10%.

While some meetings may be rescheduled in the coming days, the delays stand in stark contrast to the progress made by countries like Japan, the Philippines, Indonesia, and Vietnam, all of which have secured agreements that helped them avoid the worst-case tariff scenarios.

Lee is enjoying strong support on hopes for an economic recovery after months of political turmoil sparked by the impeachment of former President Yoon Suk Yeol. But he needs a breakthrough in trade negotiations to shield Korea’s export-reliant economy. In 2024, overseas shipments were equivalent to more than 40% of South Korea’s GDP, making the stakes especially high.

The back-to-back, last-minute cancellations come at a precarious moment.

South Korea’s National Security Adviser Wi Sung-lac said the talks are at their “final stages” and a “critical juncture,” but he was unable to meet with his US counterpart, Secretary of State Marco Rubio, during a four-day visit to Washington that concluded Thursday.

Wi said he made a planned visit to the White House, but Rubio was called away at the last minute after receiving an “urgent call” from Trump. The two officials spoke by phone instead. Treasury Secretary Scott Bessent canceled a scheduled meeting with South Korean Finance Minister Koo Yun-cheol, just hours before Koo was due to board a plane to the US. Bessent cited a scheduling conflict.

Adding urgency is the freshly signed US–Japan trade agreement this week, which Trump has hailed as a “great deal for everybody.” Under the agreement, the US will impose 15% tariffs on most imports of goods from Japan, including automobiles, in exchange for Tokyo creating a $550 billion fund to make investments in the US.

“You know the Koreans also like the Europeans, they very very much want to make a deal,” Trump’s Commerce Secretary, Howard Lutnick, said on CNBC on Thursday. “I mean you could hear the expletives out of Korea when they read the Japanese deal because the Koreans and the Japanese they stare at each other.”

What Bloomberg Economics Says...

“With US President Donald Trump striking a ‘massive Deal with Japan,’ the task for South Korea now is to ensure its automakers don’t get a raw deal that puts them at a competitive disadvantage to Japanese rivals.”

— Hyosung Kwon, economist

Click here to see full report

Despite the setback, South Korean officials are working to keep the momentum alive, focusing on meetings with Lutnick and US Trade Representative Jamieson Greer. After a meeting on Thursday, Lutnick and South Korean Industry Minister Kim Jung-kwan reaffirmed their commitment to pursue a mutually beneficial agreement ahead of the Aug. 1 deadline, Kim’s office said.

The more talks drag on, the more people question the capability of the negotiators. But Rintaro Nishimura, a Tokyo-based associate with strategic advisory firm the Asia Group, said the US trading partners are dealing with a “very challenging negotiation with three different people who have three different kinds of interests at play.”

“I don’t think the US side had one singular idea in terms of what they wanted,” he said, referring to the Japan deal. “And then Trump would just come in at some point and then say something else.”