President Donald Trump has unveiled a new trade agreement with South Korea that imposes a 15% tariff on imports from the East Asian nation, calling it a “full and complete trade deal.”
The announcement comes just ahead of a 1 August deadline for countries to strike deals with the US or face higher import duties. South Korea was at risk of being hit with a 25% tariff, but the agreement brings the rate in line with what Japan secured last week, easing pressure on Seoul’s export-driven economy.
The deal includes a commitment from South Korea to invest $350 billion in the US, a move hailed by South Korean President Lee Jae Myung as a win for both countries. The investment will focus heavily on US shipbuilding, with $150 billion earmarked to help America expand its naval and commercial fleet. South Korea is a global leader in shipbuilding, second only to China, and sees the partnership as a way to strengthen both its industry and its strategic ties with the US.
The 15% tariff will apply to cars and semiconductors which are two of South Korea’s major exports while steel and aluminium will be taxed at a higher 50% rate, consistent with US global policy. Notably, South Korea avoided opening up its sensitive agricultural markets, including rice and beef, which was a red line in the talks. Local farmers had threatened protests if those protections were lifted.
President Lee welcomed the outcome, stating that it puts South Korea in a competitive position and preserves core domestic interests. The record $56 billion trade surplus South Korea held with the US last year adds further context to the high stakes involved.
The $350 billion investment includes funds previously pledged under the Biden administration but not yet disbursed. It will also support US production of semiconductors, electric vehicle batteries, and cars, which are sectors critical to American industrial policy.
The deal leaves out one major area of tension: US military support for South Korea. Trump has repeatedly pushed for Seoul to pay more for the presence of American troops on the Korean Peninsula. While this issue was not resolved in the current deal, it is expected to be addressed during President Lee’s upcoming summit with President Trump in Washington.
Since returning to office in January, Trump has reignited his trade agenda, introducing sweeping tariffs on global imports. While he argues these measures are intended to revive US manufacturing and protect jobs, critics warn that they risk higher prices for American consumers and increased instability in the global economy.
