The United States and South Korea finalized a trade agreement Wednesday that reduces blanket tariffs to 15% from a threatened 25%, averting potential economic disruption just one day before the Trump administration’s August 1 deadline.
The deal includes a $350 billion South Korean investment fund for US projects, with $150 billion earmarked specifically for American shipbuilding development. Seoul will also purchase $100 billion in liquefied natural gas and other energy products over the next 3.5 years.
South Korean automotive exports, which totaled $34.7 billion to the US last year, will face the reduced 15% rate rather than the previously threatened 25%. However, existing tariffs on steel, aluminum and copper remain unchanged, disappointing the country’s steel industry.
The agreement represents a partial victory for Seoul, whose export-dependent economy faced significant uncertainty. South Korea generates more than 40% of its gross domestic product from exports, making trade disruptions particularly damaging.
President Lee Jae-myung, who took office in June following predecessor Yoon Suk-yeol’s impeachment, called the deal an elimination of “uncertainties” in the trade environment.
Yet questions remain about whether the investment commitments represent genuine economic expansion or merely repackaged existing plans designed to satisfy Trump’s demands for reciprocal trade arrangements.
