The new Administration in Washington has reshaped the strategic discourse on national security matters. Across the U.S. alliance network, allies of the United States are wondering which changes in posture and budgets will follow, and how they ought to be planning accordingly. The Republic of Korea (ROK) may well need to re-evaluate some of its traditional thinking on defense in response to shifting international conditions. Luckily, and unlike some other American allies, it is well prepared to do so, as it maintains the healthiest defense industrial base of any American ally, a large and capable military, and a 2.8 percent defense budget that has been consistently higher than most U.S. allies.REF

The Threat

South Korea lives in a dangerous place. It borders a nuclear-armed Stalinist monarchy in the form of North Korea that regularly engages in nuclear coercion and shares the region with an expansionist China. Both states present existential threats to South Korea.

North Korea became a nuclear power in 2006 and has since expanded both its nuclear arsenal (to around 90 weapons today) and its ability to deliver those weapons to targets in the region and to the American homeland.REF While North Korea has a very large military that includes millions of soldiers, the equipment they use are relics of the 1960s and 1970s.REF North Korea poses a conventional threat to South Korea, able to carry out strategic and even existential attacks due to its nuclear arsenal and the presence of long-range artillery that can reach Seoul and thereby inflict tens of thousands or more casualties on the South Korean population. Its conventional military, however, is qualitatively inferior to that of the South Korean military by a substantial margin.

China is a very credible—and still growing—conventional and nuclear threat to South Korea. China has the largest navy in the world, the largest concentration of cruise and ballistic missiles and fifth-generation aircraft, and is the fastest-growing nuclear power on the planet.REF While China has not yet engaged in direct military coercion against South Korea, it is increasingly comfortable doing that very thing against its neighbors in the Philippines and Taiwan.REF For that reason, South Korea must be prepared to deter and, if necessary, defeat Chinese aggression against itself.

The Republic of Korea—a Trusted, Responsible Ally

The U.S.–ROK alliance is one of America’s oldest, dating back to when U.S. and South Korean forces fought alongside each other against North Korean and Chinese forces during the Korean War. Throughout the Cold War and to this day, the ROK has maintained and advanced a capable military on the Korean Peninsula to deter renewed aggression from the Democratic Republic of North Korea (DPRK). Indeed, today South Korea has one of the most highly competitive economies in the world and notably has transformed itself from a security consumer to America’s capable and reliable security partner. It is able to play a pivotal role in East Asian security issues well beyond the Korean Peninsula. This unique alliance has been strengthened through close cooperation across the Pacific while overcoming challenges and adapting to ever-changing geopolitical, economic, and security environments.

The ROK Defense Budget and Strategy. The Republic of Korea’s defense budget for 2025 has been set at more than 60 trillion won ($45.5 billion), a 3.6 percent increase from fiscal year 2024.REF This increase takes place only five years after the ROK crossed the 50 trillion won mark in 2020.REF The ROK’s Ministry of National Defense announced its 2024–2028 midterm defense plan, noting specific increases in allocation toward operational expenses for military forces and capability improvements as the most prominent. Operational expenses for military forces saw a 4.2 percent rise to 43.5 trillion won ($30.4 billion) while defense capability improvements will increase by 2.4 percent to 18.1 trillion won ($12.6 billion).REF The ROK is planning to increase its overall defense expenditure to a total of roughly 346.7 trillion won over the next five years.REF

South Korea, through these expenditure efforts, is placing an emphasis on enhancing its three-pillared approach. The first pillar of this approach is the Kill Chain pre-emptive strike system with 3.03 trillion won allocated to its expansion.REF This capability focuses on South Korea fielding cruise missiles, long-range artillery, and ballistic missiles that would enable South Korea to strike North Korea’s nuclear and missile facilities upon clear indicators of their intended use.

The second pillar, the Korean Air and Missile Defense System, seeks to upgrade South Korea’s ability to intercept and defend itself against North Korean air and missile threats.REF To that end, the South Korean military is seeing a 1.1 trillion won ($768 million) allocation for the KF-21 Boramae air superiority fighter capable of firing air-to-air missiles along with a 71.2 trillion won ($49.8 billion) allocation for mass production of the laser air defense system capable of shooting down massed air, missile, and drone salvos launched by North Korea. Both systems would provide critical capabilities in defending South Korea from North Korean attack.REF

Third, while there is not a specific allocation increase noted, South Korea is expanding the Korea Massive Punishment and Retaliation (KMPR) program. This program aims to deter future aggression by the Kim regime by holding at risk and, if necessary, destroying North Korea’s military and political command-and-control structure. By ensuring the ability to target DPRK leadership and key hideouts in the event of a first attack from the North, the KMPR aims to prevent initiation and escalation of future conflict and, if necessary, degrade North Korea’s ability to prosecute a conflict.REF

The South Korean Military. The South Korean military ranks fifth among the world’s militaries for strength, sustaining an estimated 3,820,000 personnel in both the active duty forces and the reserves.REF It produces one of the world’s best battle tanks, the K2, as well as a very capable howitzer, the K-9, both of which form the backbone of the South Korean ground forces.REF In addition to the sizeable manpower of the South Korean military, major defense programs, such as the Korean Fighter Experimental (KF-X) Project (an indigenously produced fifth-generation fighter platform) and an indigenously produced air and missile defense system, show that Korea not only fields a highly capable military and innovative defense industrial base, but seeks to become a major player in foreign military sales.REF In addition, Korea’s military is increasingly operating with American and Japanese militaries to create a regional missile defense architecture, as evidenced by the 2023 Camp David Summit, in which the leaders of the United States, South Korea, and Japan agreed to share missile defense data—including telemetry data—on adversarial missile launches.REF

Basing. Camp Humphreys in Pyeongtaek is the largest U.S. Army Garrison abroad, costing around $11 billion to build up over the past decade, 90 percent of which was paid for by the ROK.REF Adding in other large military installments, like Osan and Kunsan Air Bases, the United States has a very robust and modern military basing footprint on the Asian mainland. In addition, the U.S. military spends around 41 percent of the total maintenance cost of all bases combined, with South Korea shouldering the remaining 59 percent.REF

In comparison, for the U.S. Ramstein Air Base in Germany, the allocation of German funds only accounts for about 18 percent of the total maintenance budget.REF This reality is also true of most other European basing as the U.S. pays significantly more than the host nations on average.

Although the U.S. net burden for overseas bases is greater in Europe than it is in South Korea, the U.S. and South Korea have a formal cost-sharing agreement (special measures agreement) that has been in place since 1991.REF While South Korea contributed around 90 percent of the cost of Camp Humphreys’ construction, the total cost breakdown of base maintenance is around 50 percent. In Europe, host nations do not have an equivalent bilateral cost-sharing agreement, meaning that the U.S. pays more for maintenance in Europe than in South Korea. In addition, the U.S. has far more bases in Europe than it does in South Korea, contributing to the imbalance of funding that is present between the two host regions.

American planners are looking across the globe and trying to recalibrate U.S. strategy, budget, and force posture to meet the challenges of the present day. In terms of force posture, there is the possibility that the composition of U.S. forces in South Korea may change, although U.S. forces will certainly remain in South Korea in some form. South Korean policymakers and politicians can alleviate some of the potential for political disruption by engaging with any potential force posture shift in a positive way, acknowledging the need for a new look at where the U.S. places military assets and what sorts of military capabilities it places there.

South Korea in the Indo–Pacific

As noted, Seoul can no longer see its security interests and relationship with America purely in terms of the Korean Peninsula—instead, it needs to view its interests in terms of the broader Indo–Pacific, including consideration of the disruptive role China is playing in the regional order. Like America, Japan, the Philippines, Australia, Vietnam, India, and others, Korea has an interest in China not dominating the Indo–Pacific. A free and open Indo–Pacific with respect for sovereignty is in South Korea’s national interest.

The ROK should emphasize a position of strategic flexibility toward its adversary neighbors in North Korea and in China. With the military equipment needed for this flexible strategy and through cooperation with the United States, the ability to deter China credibly can also be applied to North Korea. To deter China credibly, South Korea needs a robust navy and air defense capability that would undoubtedly be applicable to deterring North Korea as well. Continued cooperation between South Korea and the United States could allow a movement of additional U.S. air wings into theater to deter both North Korea and China for the mutual benefit of both the United States and South Korea.

During the Cold War, the United States maintained a limited number of non-strategic nuclear weapons on the Korean Peninsula, as a means to not only deter aggression by communist forces in North Korea and China, but also to demonstrate the U.S. commitment to defend key allies in the Indo–Pacific.REF After the Cold War, the United States removed non-strategic nuclear weapons from the region. However, rising tensions in the area have prompted increasing interest in South Korea to develop its own nuclear weapons program. It is vital that the United States remain committed to defending South Korea from nuclear attack. Returning non-strategic nuclear weapons to the Peninsula would not only enhance South Korean security but could be the only means to disincentivize South Korea to develop its own nuclear program.

Additionally, by putting American nuclear weapons on the Korean Peninsula, integrated coordination between U.S. and Korean air forces would further the focus strategy and reprioritization of the Indo–Pacific. Through this placement of weapons, a nuclear-sharing agreement similar to the kind that the North Atlantic Treaty Organization (NATO) enforces would be a key pillar contributing to Korea’s strategy of flexibility. In this sense, South Korean pilots flying South Korean aircraft could employ American nuclear weapons in times of acute crisis in coordination with the United States, just as is done among key NATO Allies.REF The ability of allies to employ deterrence capabilities, particularly American deterrence capabilities, is of benefit to both the United States and South Korea by deterring North Korea with a credible ability to impose costs on our adversaries. Through bilateral combined missions and increased tactical presence, the potential number of American troops could decrease—but may well not represent a decrease in combat capability, particularly if such a force reduction is offset by increases in American nuclear weapons and American tactical aircraft deployed into the theater.

North Korea

Recognizing the joint threat posed by North Korea and China does not diminish the distinct and serious challenge that North Korea presents on its own. As outlined in South Korea’s 2023 National Security Strategy (NSS), North Korea’s advancement of its nuclear weapons and other weapons of mass destruction (WMDs) signals growing security challenges.REF As its capacity to deploy and potentially employ low-yield non-strategic nuclear weapons and intercontinental-range strategic nuclear weapons grows, and as its rhetoric indicates an increased willingness to conduct pre-emptive or coercive nuclear strikes, the ROK must be prepared to defend and respond.REF Continued aggression through violation of the Inter-Korean Military Agreement, artillery fire within key buffer zones, and drone interference demonstrates North Korea’s desire for instability and unwillingness to cooperate for peace on the Peninsula.

Despite all this, North Korea remains a threat that the ROK is nevertheless well-positioned to deter. As the 2023 NSS recognizes, defense cooperation, particularly in terms of trilateral security cooperation in the Indo–Pacific and bilateral cooperation with the United States, will be crucial to this effort. Following several trilateral meetings between Japan, South Korea, and the U.S. at the 2022 NATO summit and further trilateral summits, all three nations have committed to jointly strengthening security initiatives, alongside more specifically sharing missile warning information, stabilizing supply chains, and developing critical and emerging technologies.REF

Maintaining these connections and expanding collaboration will be vital components of ensuring the stability of the Indo–Pacific, as it remains an area of strategic significance to all involved. As key allies, the United States values the security of both South Korea and Japan and recognizes the shared commitment to a free and open Indo–Pacific and the valuable role that each country plays in providing access for U.S. military forces to support stability in the region.REF Both nations are committed to deterring and, if necessary, defeating both North Korean and Chinese aggression.

More specifically, the ROK–U.S. alliance has been a key force for ensuring the peace and stability of the Korean Peninsula. The alliance can build on this relationship as well as the shared foundational values to promote freedom and prosperity in the Peninsula and the wider region. Through initiatives to collaborate on key security challenges, the alliance has furthered progress in traditional defense technology and shared critical intelligence and provided key innovations in emerging technologies, such as those within the space and cyber domains.

As Pyongyang escalates its threats and successful deterrence becomes even more critical, it is time for meaningful discussions between Washington and Seoul over reintroducing U.S. tactical nuclear weapons to the Peninsula.

Defense Industrial Cooperation

Korea has the healthiest defense industrial base of any American ally. In the past several years, the South Korean defense industrial base has grown rapidly—expanding its role in the global arms market, advancing its innovative sector, and ensuring the capability to efficiently and cost-effectively mass produce vital defense equipment.REF The ROK paired explosive internal development with increased defense cooperation across continents—ensuring its role as an emerging leader in the global defense industry.REF

As South Korea strengthens its defense industrial base, it has made itself an even more vital ally to the United States—and expanded its influence well beyond the Korean Peninsula. There is a massive opportunity for South Korea to work as a force for good in the region using its defense production. By taking advantage of allied defense production with South Korea in key areas, such as munitions and shipbuilding—for which South Korea has a massive capacity in terms of production and technological advancement—the United States can benefit greatly. The United States can reach maintenance and production targets faster and more efficiently while leveraging the interplay between economic security and national security, especially in a broader cooperative frame of strategic burden sharing and alliance modernization.

Two prominent Korean shipbuilders, HD Hyundai Heavy Industries and Hanwha Ocean, have both proposed a range of specific cooperation initiatives, expressing a clear commitment to support the revitalization of U.S. shipbuilding. Hanwha Ocean acquired the Philadelphia Shipyard in December 2024 (renaming it Philly Shipyard), seeking big new contracts with the U.S. government and investing in major infrastructure improvements and labor expansion at the shipyard.REF HD Hyundai Heavy Industries signed a memorandum of understanding in April 2025 with U.S. shipbuilder Huntington Ingalls for the advancement of shipbuilding productivity and advanced cooperation in the United States.REF

According to the 2023 fleet plan, the U.S. Navy is short one aircraft carrier, 19 attack submarines, two cruise destroyers, and 47 frigates.REF With a potential war with China on the horizon, the United States cannot afford to be operating beyond the limited scope the Navy currently provides. The 293 warships, that stretch across all theaters, will not suffice for a potential conflict with the ever-expanding Chinese navy, which now outnumbers the U.S. fleet.REF

The Wall Street Journal reported that South Korea builds Aegis Destroyers for $600 million in 18 months, while the U.S. builds them in 28 months for $1.6 billion.REF There are differences in design, and American shipbuilders are quick to point out that the cost difference stems in large part from far stricter design requirements imposed on them by the U.S. Navy. For political reasons, it is also hard to imagine warships being built outside the United States, and it may not be in the interest of the United States to do so. There is, however, potential for building auxiliary ships outside the United States, given how far the demand for these ships outstrips current supply. As the U.S. works to increase domestic shipbuilding capacity—an imperative—looking to South Korea for auxiliary ships is a logical step to strengthen the U.S. Navy and the Department of War’s overall warfighting capabilities.

Another cost-effective and time-saving effort would be the expansion of maintenance, repair, and overhaul (MRO) operations in the Indo–Pacific. Shipyards like Subic Bay in the Philippines or various shipyards in South Korea would provide the U.S. Navy with in-theater MRO options that would eliminate the delays caused by transferring ships back to the United States for MRO and would speed up efforts at shipyards in the United States by reducing the backlog of ships waiting for MRO. Rear Admiral Neil Koprowski stated that “Korea’s ability to conduct large-scale maintenance on U.S. Navy ships in the Indo–Pacific theater underscores the strong strategic partnership between Korea and the United States…. [M]aintenance in theater reduces downtime and costs while increasing readiness.”REF

In 2024, the United States and Japan announced a major new coproduction agreement under which Japan will co-produce Advanced Medium-Range Air-to-Air Missiles (AMRAAM) and Patriot PAC-3 missiles.REF There is considerable political support for co-production of precision-guided munitions in the United States given the widely recognized shortages of these munitions that would be so critical in an Indo–Pacific contingency. South Korean policymakers may well want to consider proposing a similar deal for co-production of precision-guided munitions.

Prioritizing and pursuing a bilateral strategic defense development and production partnership makes more sense than ever. Defense cooperation prioritization can strengthen America’s alliances and partnerships with like-minded and willing partners like South Korea that have very capable military and industrial sectors. To that end, ensuring a Reciprocal Defense Procurement (RDP) AgreementREF with South Korea should be prioritized. RDP Agreements, also known as the U.S. Department of War’s trade agreements, aim to reduce defense trade barriers and enhance rationalization, standardization, interoperability, and interchangeability among military forces.REF

There are other areas for improvement in U.S.–Korean defense industrial base cooperation. Currently, the South Korean economy is heavily integrated with that of China. In 2024, South Korea imported almost twice as much from China ($140 billion) than it did from the United States ($72.5 billion),REF and exported more to China ($133 billion) than it did to the United States ($129 billion).REF Because the South Korean economy is more integrated with the Chinese market than the U.S. market, there is a risk that shared technology could find its way into the China’s possession. Likewise, there is risk that Beijing could cut South Korea off from components used in defense equipment. The threat is not theoretical, as China has been known to use economic coercion when it dislikes a state’s behavior. In early 2025, China threatened South Korea with sanctions if it provided equipment to U.S. defense firms that include Chinese rare earths.REF The pressure could be even greater if China more broadly cut off exports, imports, or both from South Korea, potentially crippling supply chains and threatening the financial viability of Korean firms.

Some of these risks, such as critical minerals, are shared with the United States and may present an opportunity to increase defense industrial base cooperation through mutual development of alternative sources.

South Korea has already started some efforts to reduce risk. For decades, China has dominated the market for Tungsten, a key element vital to the production of semiconductors and defense equipment, including all non-U.S. armor-piercing fin-stabilized discarding sabot (AFPSDS) tank ammunition and precision-guided munitions.REF South Korea is now opening a new mine to produce tungsten and mitigate this dependence.REF These sorts of efforts are welcome and the U.S. should applaud them and support their expansion.

South Korean Foreign Military Sales

South Korea has the strongest defense industrial base of any American ally, which makes South Korea a viable source of military equipment for U.S. allies that cannot afford to buy U.S. equipment, need certain equipment faster than U.S. industry can provide it, or lack robust shipbuilding capabilities. America builds incredible military systems, but these systems are often prohibitively expensive, and some American allies cannot afford them. South Korea offers high-performing and more cost-effective options that are a more practical choice in some cases and are rarely in direct competition with American companies.

South Korea’s contract with Poland for K2 Black Panther tanks is representative. In 2022, Poland announced a contract with Hyundai Rotem for 180 K2 Black Panther tanks, with deliveries started in 2022 and ending in 2025.REF Hyundai Rotem also agreed to build a factory in Poland to produce more tanks. In 2022, Poland announced an order for 250 M1A2 SEP v3 Abrams tanks, with deliveries targeted for completion in 2026.REF The demand for defense articles currently far outstrips supply and the United States has need of allies able to build and export. South Korea’s status as a major non-NATO ally makes these sorts of deals with NATO members significantly easier to implement than they would be otherwise.

Further examples of South Korean arms exports aiding U.S. security interests include HD Hyundai and Hanwha Ocean’s agreement to join forces to bid for the construction of Canadian diesel submarines, a $49 billion contract for platforms that the U.S. does not build.REF HD Hyundai is also set to lead projects in Thailand’s frigate procurement, Malaysia’s littoral mission ship program, and Ecuador’s naval modernization initiative. Saudi Arabia recently purchased $3.5 billion worth of Cheongung II KM-SAM, a mid-range, medium altitude interception system, the first foreign nation to operate this system.REF

Recent arms transfer deals have catapulted the nation into the position of the world’s tenth-largest arms exporter between 2020 and 2024.REF Many other nations have turned to the ROK as a means for arms provisions. South Korea is the second-largest arms provider for six of the 40 largest importers, including Indonesia, New Zealand, Norway, Poland, Thailand, and the United Kingdom, and is the top supplier to the Philippines.

South Korea has proven to be a sustainable partner for Foreign Military Sales and would present a vital opportunity for regional stability through its healthy defense industrial base. The United States wants a free and open Indo–Pacific composed of states capable of defending their sovereign interests. South Korean arms exports to Southeast Asia in particular help to further this goal.

Policy Recommendations for South Korea

To strengthen its defense alliance with the United States, South Korean policymakers should:

• Envision South Korean interests regionally. The size of the South Korean economy and strength of the South Korean military and defense industrial base have made Seoul a regional player that can pursue its interests well beyond its immediate neighborhood. South Korean policy planners need to think of their role in terms of the broader Indo–Pacific, not exclusively or even primarily in terms of the Korean Peninsula.
• Pursue shipbuilding and co-production agreements with the U.S. The United States is looking for partners to expand its shipbuilding and munitions production, and South Korea is well suited, perhaps more so than any other American ally, to contribute to and benefit from these agreements.
• Embrace an era of change. There is considerable angst in allied capitals about changes in U.S. strategy and force posture and what this means for their own security. U.S. conservative policymakers look at the strategy, budget, and force posture of the U.S. military and see a force designed to deter the Soviet Union or to fight the War on Terror that is not ready for the new era of great power competition centered on deterring China from aggression in the Indo–Pacific. Changes to strategy, budget, and force posture are necessary and there will be an important if potentially slightly different role to play for South Korea, whose planners are reconsidering their strategic environment and changed circumstances just as much as planners in Washington.

Conclusion

The U.S.–South Korean alliance is vital to U.S. national security, both in the Indo–Pacific and globally, as it remains a key player in ensuring effective deterrence of North Korea and China and provides opportunities to bolster the U.S. defense industrial base through shipbuilding and co-production opportunities. It is in the clear interest of both Washington and Seoul to bolster the pivotal partnership in pragmatic ways, particularly through greater strategic clarity and cooperative commercial initiatives that will enhance the resilience and practicality of the alliance. As the threat in the Indo–Pacific grows increasingly more credible and imminent, South Korea remains a key ally, and both American and South Korean planners will need to take into account the national security concerns of the other.

Robert Peters is Senior Research Fellow for Strategic Deterrence in the Douglas and Sarah Allison Center for National Security at The Heritage Foundation. Wilson Beaver is Senior Policy Advisor for Defense Budgeting and NATO Policy in the Allison Center. Jim Fein is Research Associate for National Security and Defense Industrial Base in the Allison Center. Anthony B. Kim is Jay Kingham Research Fellow in International Economic Affairs, Editor of the Index of Economic Freedom, and Manager of Global Engagement in the Margaret Thatcher Center for Freedom at The Heritage Foundation.