As China and U.S. Split Over Energy, Korea Is Stuck in the Middle

South Korea, a global industrial powerhouse, made a bold bet on the United States a few years ago. It resolved to help Americans compete in the energy technologies of the future and, in so doing, reduce the United States’ dependence on its chief rival on the world stage, China.

Now, South Korea is reeling from uncertainty.

U.S. energy priorities have done an about-face. Korean exports to the United States have been hit with Trump tariffs, which will now stand at 15 percent as part of a new trade deal. Korean workers have been deported from a $5.5 billion Korean auto factory in Georgia. To assuage the White House, Korea’s president has promised to buy more American natural gas than his country may be able to use. A Korean shipbuilder has promised to build a U.S.-flagged ship to ferry gas across the seas.

None of that may be enough.

Korean officials are watching carefully what happens at a summit meeting their country is hosting this week, where President Trump plans to meet with his Chinese counterpart, Xi Jinping. If the United States and China strike a trade deal, as officials from Washington and Beijing have indicated, Korea stands to lose its edge as an alternative to China.

All of this reflects the dilemmas confronting many countries amid an epic competition between the world’s two superpowers on energy and trade. The United States is bent on a future of burning more fossil fuels. China is promoting the renewable energy technologies it controls.

South Korea, like many countries around the world, wants both.

The United States and China are its two big trading partners. Korea needs a range of raw materials from China, whether graphite for battery anodes or photovoltaic cells to make solar panels. And it needs Chinese consumers to buy the electronics it makes.

But Korea also needs the United States’ military protection in the face of nuclear shenanigans by its adversary to the north, Kim Jong-un. And it desperately needs the American market. Korea has cast itself as a reliable alternative supplier of clean energy technologies to buyers that might be wary of relying on China. Its key advantage, in other words, is that it’s not China.

The rise of gas in Korea

Incheon, on Korea’s northwestern coast, is where General Douglas MacArthur in 1950 led a legendary assault that turned the Korean War to the South’s favor.

Today, Incheon is home to the world’s largest terminal to import L.N.G., or liquefied natural gas. As such, it is a linchpin of the Trump administration’s relationship with Seoul.

South Korea began importing American L.N.G. during Mr. Trump’s first term, in 2017. The U.S. fracking boom was just starting and South Korea was trying reduce its dependence on nuclear power. Gas imports grew, but have since flattened for a variety of reasons, and they are projected to decline in the coming decade as Korea pivots toward cleaner energy like wind power.

Today, around a tenth of South Korea’s L.N.G. supply comes from the United States, ferried by tankers from export terminals that Korean banks helped finance on the Gulf Coast of Texas and Louisiana. The rest comes from gas suppliers in the Middle East and elsewhere.

Whether that’s good for his country, or even realistic, is unclear. Not only is gas demand projected to decline as South Korea ramps up renewables, but getting locked into multiyear deals with U.S. exporters now, when gas prices are relatively high, could prove to be costly.

Not to mention, being overly reliant on one supplier can be hazardous. “Diversifying supply sources is important,” said Taesik Kim, a research fellow at the Korea Energy Economics Institute in Ulsan. After all, relations between nations can change over time, sometimes drastically, as recent events have shown.

Gas makes up a fifth of South Korea’s energy mix. The South Korean government, though, is reducing its use of fossil fuels and stepping up renewables in order to cut its greenhouse gas emissions. The Trump administration’s pressure to buy more gas undermines that goal.

For the time being, though, South Korea, like many countries around the world, is trying to mollify a mercurial Trump administration.

Korean companies need Americans to buy what they make. Their own market is far too small. “It’s about seeing the American market and the American continent as the place for future business,” said Mr. Haggard, the former U.S. diplomat.

Bad bet on clean energy in the U.S.

South Korea had banked on Americans’ appetite for clean energy as future business.

Not that Korea could compete with China, which outcompetes everyone on renewable energy technology. China produces the most affordable electric cars in the world and the least-costly solar panels. It dominates the processing of the minerals for batteries

But Korea’s idea was that it would help the United States make some headway in clean energy. Korean companies knew how to make electric cars, the batteries that go into electric cars and the charging stations to power those electric cars. And by investing in factories in the United States, Korean companies could train and employ millions of American workers.

Billions of dollars poured in from Seoul.

Hyundai built a $5.5 billion electric vehicle plant outside Savannah, Ga., part of a $26 billion investment plan for the United States. Another Korean company, CS Wind, bought a factory in Colorado to make wind towers.

LG Energy Solutions opened seven battery factories across the United States. A rival battery maker, SK On, partnered with Ford to supply its nascent line of electric vehicles. One of its subsidiaries set up a factory in Plano, Texas, to make charging stations. Samsung said it planned to invest $55 billion to make batteries and semiconductor chips in America.

The Biden administration’s policies accelerated these investments. The Inflation Reduction Act offered incentives to set up clean energy manufacturing plants.

Then came the election of Mr. Trump. He shredded Biden-era renewable energy incentives. The American auto industry more or less put the brakes on their plans for electric vehicles, jolting Korean companies that had banked on a transition in the United States away from gasoline-burning vehicles.

There was one upside for Korea, however. The Trump administration raised tariffs on Chinese goods.

For Korean companies, particularly the largest ones, that meant all was not lost. The higher the tariffs on Chinese batteries, the better it was for Korean battery makers and, particularly, Korean battery makers in the United States. And even if electric vehicles were slipping in the United States, Korean battery makers could pivot to making batteries for energy storage. Data centers certainly needed them.

Enter now new uncertainty in the form of a potential U.S.-China trade deal that could be announced this week at the Asia-Pacific Economic Cooperation summit.

Will the new deal make it easier on Korean battery makers that still rely on China for battery materials, like graphite? That would be a relief. Will that allow Chinese companies to export to the United States batteries they make elsewhere, or even set up plants in the United States? That would be bad for Korea. Andrew Yeo, a Korea specialist at the Brookings Institution, called a U.S.-China deal “a double-edged sword.”

The details are not yet known, only that the United States may pause some tariffs on Chinese goods, and that China may pause proposed restrictions on rare earth minerals. For now, there’s no telling what kind of deal Trump and Xi will strike, nor how stable that will be.

“They want to know: What are the new rules of the road?” said Tim Bush, a battery industry analyst at UBS Securities.

Grace Moon reported from Seoul.