South Korea's free trade agreement with the United States could help mitigate its exposure to reciprocal tariffs threatened by U.S. President Donald Trump, economists at two major investment banks have said.

South Korea's acting President Choi Sang-mok on Tuesday said his government would seek talks with the U.S. administration about Washington's 25% tariffs on steel and aluminium imports to reflect the interests of its companies.

He said, however, the tariffs may offer opportunities for Korean companies to find new export markets. South Korea will "actively consider" whether there is room for negotiation on the tariffs with the United States,

The United States and South Korea held live-fire drills Monday near the demilitarized zone as tensions remain high with nuclear-armed North Korea.

North Korea has accused the US of engaging in a "hostile military act" and posing a "grave security threat" to the country by sending a nuclear submarine to a South Korean port. The USS Alexandria entered the Busan port on Monday for supplies and rest for its crew,