WASHINGTON/SEOUL – US President Donald Trump said the United States will impose a 15 percent tariff on imports from South Korea, down from the 25 percent it had threatened, as part of a deal to ease tensions with one of Asia’s top 10 trading partners and a key Asian ally.
South Korea also agreed to invest $350 billion in the United States in projects chosen by Trump and purchase energy products worth $100 billion.
The agreement was announced after Trump met with Korean officials at the White House, amid a wave of trade policy announcements. The pace of deals accelerated before August 1, when Trump promised to impose higher tariffs.
Trump wrote on Truth Social: “I am pleased to announce that the United States of America has agreed to a complete and comprehensive trade agreement with the Republic of Korea”.
The negotiations represented an early test for South Korean President Lee Jae-myung, who took office in June after early elections. He said the agreement removed uncertainty and set US tariffs at a level lower than or equal to those imposed by major competitors.
“We have overcome a big obstacle,” he told me in a Facebook post. Trump said Lee would visit the White House “within the next two weeks” for his first meeting with the US president, adding that South Korea would accept US products, including cars and agricultural goods, into its markets and would not impose any tariffs on them.
Kim Jin-wook, an economist at Citigroup, said Seoul appeared to be defending its non-tariff barriers while keeping the tariff rate on par with Japan and the European Union, adding, “While the key figure looks like a big win for the United States, the details look favorable for South Korea”.
devil’s in the details
South Korea appears to have avoided the worst, according to Cheung In-kyu, South Korea’s former trade minister. But he also noted that views on the agreement could change if the $350 billion is not spent optimally.
The nature of the investment, the source of financing, the time frame for implementing the deals, and the extent to which their terms are binding are not yet clear. Trump said additional South Korean investments would be announced later.
Kim Young-bum, chief policy officer at the South Korean presidential office, said at a press briefing that $150 billion of the total amount is allocated to a shipbuilding partnership, while $200 billion includes chips, nuclear energy, batteries and biotechnology.
“ambiguity is a good thing”, he said, adding that negotiators made sure there were guarantees about how the money would be used.
Another presidential official said that current investment plans for South Korean companies will be part of the fund.
US Commerce Secretary Howard Lutnick said in a post on X that 90% of the fund’s $350 billion in profits “go to the American people.”
Kim said South Korea realizes this means some profits can be reinvested.
He added that energy purchases will include liquefied natural gas, liquefied petroleum gas, crude oil and a small amount of coal.
“This is within our usual import volume,” he said, noting that it could lead to a “slight shift” in the country’s import mix from the Middle East to more American sources.
Lutnick said energy purchases will take place “over the next three and a half years”.
Lutnick said the tariff rate on South Korean cars will also be 15%, lower than the current rate of 25%. Lutnick also added that semiconductor and pharmaceutical exports will not be treated more harshly than exports from other countries. The new agreement does not include steel, aluminum and copper.
