Seoul-Washington strike USD 450 bn investment deal to cap US tariff at 15%

Seoul [South Korea], August 7 , South Korea narrowly avoided steep U.S. tariffs on Thursday after sealing a high-stakes trade deal with Washington, capping new import duties at 15 per cent, instead of the 25 per cent originally set to take effect from Friday.

As reported by The Korea Herald, in exchange, Seoul pledged a USD 350 billion investment package along with USD 100 bn energy imports from U.S and most favoured nation status to U.S., in key sectors which helped in reinforcing cap on tariffs.

The agreement, reached just hours before the deadline, suspends the near-zero tariff regime under the 2012 Korea-U.S. Free Trade Agreement and introduces a new "reciprocal" rate similar to deals recently struck with Japan and the European Union. The deal comes at a critical time, with the U.S. taking in nearly a fifth of Korea's total exports reports Korea Herald.

The newly installed government in Seoul moved quickly to craft a deal acceptable to Washington, negotiating up from an initial USD 100 billion offer before agreeing to the final USD 350 billion package, below Japan's USD 550 billion commitment to the U.S.

President Lee Jae Myung called the outcome a "major breakthrough," crediting it with restoring predictability for Korean exporters. "This agreement aligns America's goal of manufacturing revival with Korea's ambition to expand its industrial competitiveness in the US market," Lee said in a Facebook post. "It will further deepen Korea-US industrial cooperation and strengthen our alliance."

Of the Korean investment, USD 150 billion will fund a major shipbuilding initiative named "Make American Shipbuilding Great Again." Finance Minister Koo Yun-cheol said the program was "the single most decisive factor" in finalizing the deal. "With Korean shipbuilders recognized for world-class design and construction capabilities, the project is expected to unlock new growth momentum and position Korea as a core partner in reviving US industry," he said.

Another USD 200 billion will support joint industrial efforts in strategic sectors like semiconductors, nuclear energy, batteries, and biopharma. To reduce risk, the U.S. agreed to take over output from vetted projects, according to presidential policy chief Kim Yong-beom.

Korea also committed to buying USD 100 billion in U.S. LNG and energy products over four years and secured most-favored-nation treatment for future tariff considerations on key exports. Sensitive agricultural sectors like rice and beef were shielded from new concessions.

While several contentious issues remain unresolved, a summit between President Lee and U.S. President Donald Trump is being planned within the next two weeks.

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