The United States and South Korea have struck a fresh trade deal that imposes a 15% tariff on South Korean goods imported into America.
US President Donald Trump announced the trade deal on Wednesday, just hours ahead of the August 1 deadline.
The development came after Trump announced 25% tariffs against India and an additional penalty for importing Russian energy and defence equipment.
South Korea and Japan were among the first set of countries to receive 25% tariff letters from the Trump administration, but the nations successfully negotiated to bring them down to 15%.
US-South Korea trade deal: Key features
The trade deal blends tariffs with strategic investment as all South Korean exports to the US will now face a 15% blanket tariff, a notable climbdown from the initially threatened 25%, and a move that brings the rate in line with similar agreements recently inked by Washington with Japan and the EU.
As part of the broader package, Seoul has pledged $350 billion in US-based investments, with $150 billion directed specifically toward revitalizing America’s flagging shipbuilding industry under a banner initiative dubbed “Make America Shipbuilding Great Again.”
The rest of the capital will flow into critical sectors like semiconductors, clean energy, batteries, biologics, and nuclear power.
Moreover, South Korea will purchase $100 billion worth of liquefied natural gas and other energy products from the US over the next three and a half years.
This will come as a significant boost for America’s energy exporters.
The deal also opens doors for US producers, promising reduced or zero tariffs on automobiles, trucks, and agricultural goods entering the South Korean market.
Implications for both nations
For Washington, the deal is being pitched as a boost for US manufacturing jobs and a way to attract serious foreign investment, with South Korea pledging billions across shipbuilding, energy, and tech.
Seoul, meanwhile, avoids the heavier 25% tariff that had been looming and locks in access to the US market for its industrial heavyweights, especially shipbuilders and chipmakers.
That alone was enough to send South Korean shipbuilding stocks up more than 15% on the news.
The broader picture, though, is less rosy: this agreement is the latest in a string of bilateral deals the US has cut with allies like Japan and the EU, while others, including India, have been slapped with the full 25% tariff.
Analysts say the patchwork approach is already straining global supply chains and may soon be felt by American consumers in the form of higher prices.
South Korean President Lee is slated to visit Washington in the coming weeks, and the finer points of the investment package are expected to be hammered out.
Meanwhile, the White House has moved to suspend the long-standing “de minimis” rule, which had allowed low-value imports to enter the country tariff-free.
That change means a wider range of foreign goods, many from Asia will now be hit with duties, further tightening the screws on global trade flows.
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