Coupang dispute raises U.S.-South Korea tariff tensions

The South Korean government’s dismissal of the findings of a congressional report alleging it’s waged a targeted campaign against U.S.-based Coupang — commonly known as the Amazon of South Korea — is straining the relationship between the two global allies, officials in Congress and people close to the company told CNBC.

CNBC spoke with nearly a dozen people familiar with the Coupang-related tensions, some of whom asked not to be named in order to discuss sensitive matters. The company’s representatives and supporters on Capitol Hill say they’re seeking a quick end to what they describe as South Korea’s campaign against the online retailer. People familiar with the situation raised the specter of retaliation from Congress or the White House, including potentially additional tariffs on South Korea, if the dispute drags on.

The report by the House Judiciary Committee’s Republicans alleges the South Korean government waged an unprecedented offensive on Coupang — which is headquartered in Seattle and does the bulk of its business in South Korea — over a data breach that the company maintains was minimal.

The South Korean government disagrees on the scope of the breach and has said consumers in the country faced potential harm from their personal details being exposed. It held hearings, threatened criminal charges against Coupang’s interim CEO, and levied a record-breaking data-privacy fine on the company.

“This isn’t about just some commercial dispute,” Chris Stewart, a former Republican congressman from Utah and president of lobbying firm Skyline Capitol, which has a consulting relationship with Coupang, told CNBC about the Coupang issue. “Policymakers, leaders in Congress and the White House understand this is really about the relationship between two key allies.”

“The worst thing that could happen is if we get into a tit-for-tat environment, where [the U.S. seeks] to punish Korea in some way or tie this to an increase in tariffs. That’s not my hope or desire at all,” he said. But if South Korea doesn’t back down, he said, “ultimately the president has the power of tariffs, which can be very powerful.”

The South Korean government, through its embassy in Washington, said its alliance with the U.S. is “stronger than ever” and criticized the congressional report, which the Judiciary Committee released in July, as largely reflecting only Coupang’s claims.

“The Korean Government has consistently engaged with members of the U.S. Congress and officials of the U.S. administration to explain our position regarding the Coupang matter, and we will continue these efforts going forward,” a…