Trump: South Korea Agrees to 15% Tariffs, Pledges $35 Billion Investment in US
CCTV Finance APP has learned that US President Donald Trump has reached a trade agreement with South Korea, which will impose a 15% tariff on Korean goods shipped to the US and require South Korea to invest $35 billion in the US. Trump tweeted on Wednesday: "We have agreed to a 15% tariff on South Korea. The US will not be subject to tariffs."
Trump announced that this investment fund is similar to the one Japan has committed to, which helped reduce tariffs. Trump said that, just like with Japan, he personally will decide how the $35 billion will be invested in the US.
South Korea has agreed to accept US products, including cars and trucks, agricultural products, etc." This may mean that South Korea will reach an agreement with the US to accept vehicles and trucks produced according to US safety standards, but without imposing any additional requirements on them.
A senior official at the South Korean government confirmed this agreement and said that it also includes a 15% discount tariff on cars, which has been a major point of contention in recent talks between the two countries. South Korean President's Chief Secretary Kim Yong-beom stated during a press conference in Seoul that the agreement will also avoid further openings of the US beef and rice markets to South Korea.
Although cars and auto parts will enjoy a 15% lower tax rate, US Trade Representative Robert Lighthizer said that, according to the trade agreement with South Korea, steel and aluminum products will not be subject to the same preferential tax rate.
Trump said that South Korea will purchase $1 trillion worth of liquefied natural gas or other energy products. Previously, the EU had committed to purchasing $75 billion worth of US energy products over a period of three years, while skepticism has grown about how the US will fulfill its procurement commitments under various trade frameworks with other countries.
Trump has always emphasized that, in the process of reaching framework trade agreements, investment should be increased and related procurement commitments fulfilled - especially those related to the US's rich oil and gas resources.
The 15% tariff rate applicable to South Korea is the result of months of negotiations. This move helps the US's sixth-largest trading partner, South Korea, avoid a previously scheduled 25% tariff on August 1, while also avoiding new penalties for dozens of US trade partners.
For the new Korean government, these negotiations are particularly challenging because President Lee In-myung is considering allowing the US to enter more into the Korean beef and rice markets - an extremely sensitive political issue that sparked massive protests in 2008.
Lee In-myung praised this agreement for eliminating uncertainty for exporters and helping South Korea compete with major economies on equal or better terms. This $35 billion fund will help Korean companies enter the US market, with $1.5 billion specifically designated for the shipbuilding industry.
The details of this fund are still unclear, similar to the Japanese agreement, and different parties have different explanations.
Trump said that South Korea's President will visit Washington within two weeks to hold bilateral talks.
In the final weeks before the August 1 tariff deadline set by the US, several Asian countries are competing to lock in more favorable terms. Japan has established a 15% new benchmark tariff rate and attached an investment commitment. Japanese officials later clarified that most of these investments will be provided through loans rather than cash. Indonesia and the Philippines have locked in rates of 19%, while Vietnam's rate is 20%. Thailand and Cambodia have had border conflicts, with both countries facing a 36% tariff. Trump said that the US will not reduce tariffs during conflicts between the two countries. This statement has prompted them to further adhere to a cease-fire agreement.