SEOUL (BLOOMBERG) - Cracks may be emerging in the so-called ironclad military alliance between South Korea and the United States, stoking worries in Seoul that the Trump administration is looking at withdrawing troops from the peninsula.

Defence Secretary Mark Esper is not ruling out reductions to US Forces Korea, telling a forum on Tuesday (July 21) that, while no order has been given, the administration was looking to adjust its posture globally.

He was responding to a July 17 report in the Wall Street Journal saying that the Pentagon had given President Donald Trump options to draw down troops amid a deadlock over the US' demands for more funding.

While Mr Trump has complained about open-ended US military commitments since before taking office, the threat of a withdrawal has increased since his decision last month to reduce the country's military footprint in Germany.

South Korean President Moon Jae-in's government has said little about a troop cut if the two sides cannot renew their expired Special Measures Agreement, but some worry the discussion could signal weakness to neighboring North Korea and China.

"The alliance is a matter of survival to South Korea," said retired South Korean Major General Kim Joong-ro.

"Of course, Washington's SMA demands are overwhelming, but this shouldn't hurt the alliance itself. There is no such thing called a 'second chance' in security."

Mr Trump has asked South Korea contribute about US$5 billion (S$6.9 billion) for hosting some 28,500 American military personnel, well above the current one-year deal where Seoul pays about US$1 billion.

The price tag originated with the White House, according to people familiar with the matter, and has been a non-starter in South Korea with both the progressive ruling bloc and the conservative opposition seeing it as exorbitant.

"I've issued no orders to withdraw forces from the Korean Peninsula," Mr Esper said in an internet discussion, but he would not say if that meant a future cut in South Korea.

"We will continue to look at the adjustments at every command we have and every theater to make sure we are optimizing our forces."

The troops were intended to provide a frontline defence against North Korea and potentially China. The rumblings come as North Korea has said it sees no point in having nuclear negotiations now with Washington and raised tensions with its neighbour South Korea by blowing up in June a joint liaison office located just north of their border.

Mr Trump has suspended joint military drills with South Korea to help nuclear negotiations with leader Kim Jong Un and said after his first meeting with Kim in 2018 that he would "like to bring them back home, but that's not part of the equation right now".

The seven-decades-old military alliance between the US and South Korea was dealt a blow in April when the American military put almost half of its 8,500 South Korean civilian workers on furlough after the two sides could not reach a new financing deal after months of negotiations, letting their deal expire at the end of 2019.

"America needs its troops in South Korea to check China's growing global clout, but if the cost is too high, that strategy may change in any time," said Mr Park Hwee-rhak, a former South Korean army colonel now a professor of politics at Kookmin University in Seoul.

"We must note that the alliance is a matter of survival to South Korea, but is one of the many strategic choices to the US."