Gyeongju: South Korea and the United States reached a comprehensive tariff agreement on Wednesday, marking a significant development in their industrial and economic relations. The deal was finalized during a summit held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) gathering in Gyeongju, where South Korean President Lee Jae Myung and U.S. President Donald Trump detailed a trade deal involving a $350 billion investment pledge from South Korea and revised tariffs on automobiles.
According to Yonhap News Agency, the framework for this agreement was initially established in July when the U.S. reduced “reciprocal” tariffs from 25 percent to 15 percent. In return, South Korea committed to significant investments in key U.S. industries, including shipbuilding. The finalized deal on Wednesday maintains these reciprocal duties on Korean goods while reducing sector-specific tariffs on Korean cars and auto parts to 15 percent.
This agreement is expected to deepen industrial and economic ties between the two nations, positioning South Korea favorably in competition with other economies within the U.S. market. Initially, South Korea faced challenges in negotiations due to a leadership vacuum following the impeachment of former President Yoon Suk Yeol. However, trade talks accelerated after Lee Jae Myung’s election in June.
The framework agreement was reached on July 30, shortly before the August 1 deadline set by the Trump administration. Since then, both countries engaged in detailed negotiations over investment commitments, including financing methods and profit allocation. Under the terms agreed upon, South Korea’s $350 billion investment will be divided into two parts: $200 billion in cash installments and $150 billion for shipbuilding industry cooperation, with an annual investment cap of $20 billion.
Kim Yong-beom, presidential chief of staff for policy, stated that the memorandum of understanding will include “commercial rationality” and profits will be split equally until the investment is recovered. The cash installment amount was a contentious issue, with the U.S. initially seeking upfront payments, while South Korea preferred indirect investments such as loans.
Pressure increased on South Korea after Japan agreed to a $550 billion investment in U.S. projects. During a special address at the APEC CEO Summit, President Trump acknowledged South Korea’s Industry Minister Kim Jung-kwan for his tough negotiations, expressing a wish for a less formidable counterpart.
The deal includes a proposal for bilateral shipbuilding cooperation, the “Make American Shipbuilding Great Again (MASGA)” project. This initiative aligns with President Trump’s goals for revitalizing the U.S. shipbuilding industry and was instrumental in reaching the agreement.