U.S. and South Korea strike a commerce cope with tariffs on Seoul set at 15%

U.S. President Donald Trump on Wednesday introduced that Washington had reached a “Full and Full” commerce cope with Seoul, setting blanket tariffs on the nation’s exports to U.S. at 15%.

This deal signifies that duties shall be lowered from the 25% that Trump had threatened in his “tariff letter” to Seoul earlier this month. Tariffs on the nation’s auto exports set at 25% can even be lower to fifteen%.

Trump additionally stated in his submit on social media platform Reality Social that South Korea “will give to america $350 Billion {Dollars} for Investments owned and managed by america, and chosen on my own, as President.”

There seemed to be a distinction within the interpretation between Seoul and Washington on how that quantity can be utilized.

Saying in a submit on Fb that his nation had “concluded tariff negotiations” with america, South Korea’s President Lee Jae-myung stated that the $350 billion fund “will play a task in facilitating the lively entry of Korean firms into the US market in industries the place we’ve strengths, resembling shipbuilding, semiconductors, secondary batteries, biotechnology, and power,” based on a CNBC translation of his assertion in Korean.

He stated $150 billion of that allocation shall be for “shipbuilding cooperation offering sturdy assist for Korean firms getting into the US shipbuilding business,” including that “It is necessary to attain mutually useful outcomes, not simply pursue unilateral positive factors.”

In feedback to CNBC after the deal was introduced, Louise Bathroom, head of Asia economics at advisory agency Oxford Economics, stated that the numbers introduced to this point “do not add rather more readability — as with the offers [the] US struck with different Asian friends.”

U.S. Commerce Secretary Howard Lutnick stated that “90% of the income” from that $350 billion funding shall be “going to the American individuals.” That is just like what Trump introduced about Japan’s funding within the U.S. as a part of a commerce deal agreed earlier this month, which has reportedly been challenged by Tokyo.

Japan’s authorities stated Friday that income from a $550 billion funding agreed within the tariff cope with the U.S. can be divided between the 2 international locations primarily based on their diploma of contributions, based on a Reuters report.

Wendy Cutler, senior vice chairman of the Asia Society Coverage Institute and former deputy U.S. commerce consultant stated in a notice that “As soon as a U.S. commerce deal was concluded with Japan, Korean negotiators had little selection however to work onerous to conclude their very own commerce deal in order to not be deprived within the U.S. market.”

Whereas Seoul didn’t handle to get any concessions on metal and semiconductors, she famous that it had efficiently resisted U.S. calls to additional open its beef and rice markets, which Cutler describes as “two extremely delicate sectors.”

Trump on Wednesday additionally stated that as a part of the deal, Seoul will buy $100 billion {dollars} of LNG or different power merchandise from the U.S, including that Seoul had additionally agreed to take a position “a big sum of cash for his or her Funding functions.”

The sum shall be disclosed when Lee visits Washington for a bilateral summit inside the subsequent two weeks, he added.

U.S. items is not going to be subjected to any tariffs, Trump stated. As of 2024, South Korea’s efficient tariff charge for items imported from the U.S. was about 0.79%.

ASPI’s Cutler stated that the brand new deal “negates the worth of our bilateral FTA the place the US and Korea eradicated virtually all of their respective tariffs. As an FTA accomplice, Korea regrettably appears to haven’t acquired any particular remedy.” Seoul has had a free commerce settlement with the U.S. since 2012.

U.S. items commerce with South Korea was somewhat over $197 billion in 2024, based on U.S. authorities information, and its deficit with the nation stood at $66.0 billion in 2024, 29.2% greater from a yr earlier.

Lee stated in his submit that “I hope that via this, industrial cooperation between Korea and US shall be strengthened and the alliance between Korea and America can even be strengthened,” whereas including that Seoul will hold “diplomacy centered on nationwide curiosity” as its high precept.

South Korea will “not be handled any worse than another nation on semiconductors and prescription drugs. Metal, aluminum, and copper usually are not included and stay unchanged,” Lutnick stated. Metal, aluminum and copper exports to the U.S. throughout international locations face 50% tariffs.

Oxford’s Bathroom stated South Korea locking in a 15% tariff charge for autos like Japan “might be seen as a win for President Lee [Jae Myung].” She cautioned although that tariffs on electronics and semiconductors might nonetheless be escalated.

South Korea’s benchmark Kospi index was up 0.5% after the announcement, whereas yields on its benchmark 10-year bonds have been marginally greater.