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

• This deal means the duties will be lowered from the 25% that Trump had threatened in his “tariff letter” to Seoul earlier this month.
• South Korea will “give to the United States $350 Billion Dollars for Investments owned and controlled by the United States,” Trump said.
• Seoul's deal with Washington comes close on the heels of a similar deal between the U.S. and Japan.

U.S. President Donald Trump on Wednesday announced that Washington had reached a “Full and Complete” trade deal with Seoul, setting blanket tariffs on the country's exports to U.S. at 15%.

This deal means that duties will be lowered from the 25% that Trump had threatened in his “tariff letter” to Seoul earlier this month. Tariffs on the country's auto exports set at 25% will also be cut to 15%.

Trump also said in his post on social media platform Truth Social that South Korea “will give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself, as President.”

There appeared to be a difference in the interpretation between Seoul and Washington on how that amount would be utilized.

Announcing in a post on Facebook that his country had “concluded tariff negotiations” with the United States, South Korea's President Lee Jae-myung said that the $350 billion fund “will play a role in facilitating the active entry of Korean companies into the US market in industries where we have strengths, such as shipbuilding, semiconductors, secondary batteries, biotechnology, and energy,” according to a CNBC translation of his statement in Korean.

He said $150 billion of that allocation will be for “shipbuilding cooperation providing strong support for Korean companies entering the US shipbuilding industry,” adding that “It's important to achieve mutually beneficial outcomes, not just pursue unilateral gains.”

U.S. Commerce Secretary Howard Lutnick said that “90% of the profits” from that $350 billion investment will be “going to the American people.” This is similar to what Trump announced about Japan's investment in the U.S. as part of a trade deal agreed earlier this month, which has reportedly been challenged by Tokyo.

Japan's government said Friday that profits from a $550 billion investment agreed in the tariff deal with the U.S. would be divided between the two countries based on their degree of contributions, according to a Reuters report.

More investments

Trump on Wednesday also said that as part of the deal, Seoul will purchase $100 billion dollars of LNG or other energy products from the U.S, adding that Seoul had also agreed to invest “a large sum of money for their Investment purposes.” The sum will be disclosed when Lee visits Washington for a bilateral summit within the next two weeks, he added.

U.S. goods will not be subjected to any tariffs, Trump said. As of 2024, South Korea's effective tariff rate for goods imported from the U.S. was about 0.79%. Seoul has a free trade agreement with the U.S. since 2012.

U.S. goods trade with South Korea was a little over $197 billion in 2024, according to U.S. government data, and its deficit with the country stood at $66.0 billion in 2024, 29.2% higher from a year earlier.

Lee said in his post that “I hope that through this, industrial cooperation between Korea and US will be strengthened and the alliance between Korea and America will also be strengthened,” while adding that Seoul will keep “diplomacy centered on national interest” as its top principle.

South Korea will “not be treated any worse than any other country on semiconductors and pharmaceuticals. Steel, aluminum, and copper are not included and remain unchanged,” Lutnick said. Steel, aluminum and copper exports to the U.S. across countries face 50% tariffs.

South Korea's benchmark Kospi index was up 0.5% after the announcement, while yields on its benchmark 10-year bonds were marginally higher.