South Korea, US Reach Tariff Deal, Cut Rates to 15%

Sejong, South Korea / Washington D.C. - South Korea and the United States concluded tariff negotiations on Thursday in KST, with both countries agreeing to reduce mutual tariffs to 15% from 25%, the South Korean government said.

Deputy Prime Minister Koo Yun-cheol and Trade Minister Kim Jung-kwan met with U.S. President Donald Trump at the White House at 5 p.m. local time to finalize the agreement, according to a statement from South Korea's Ministry of Trade, Industry and Energy.

The United States will lower tariffs on South Korean goods to 15% from 25% starting August 1. Section 232 automotive tariffs will also be reduced to 15% from 25%, the ministry said.

South Korea will receive most-favored-nation treatment for semiconductors and pharmaceuticals regarding future tariff decisions, according to the statement.

South Korea will establish a US$150 billion shipbuilding cooperation fund to support U.S. shipyard acquisitions, expansions, ship construction, maintenance, and repair operations, as well as shipbuilding equipment based on demand from Korean companies, the ministry said.

The country will establish a US$200 billion investment fund for the semiconductor, nuclear power, battery, biotechnology, and critical minerals sectors.

The fund will provide investment, loans, and loan guarantees, according to the statement.

South Korea agreed to recognize equivalency with U.S. automotive safety standards and address some non-tariff barriers listed in the U.S. National Trade Estimate Report to improve market access for U.S. goods, the ministry said.

The agreement includes South Korean purchases of US$100 billion worth of U.S. energy over four years, equivalent to approximately KRW 140 trillion, to address trade imbalances between the countries.

U.S. exports account for 19% of South Korea's total global exports, according to the ministry.

The ministry stated that the agreement eliminates competitive disadvantages that would have arisen after similar U.S. agreements with Japan and the European Union take effect on August 1.

Deputy Prime Minister Koo said the agreement would help support South Korea's export sector and improve the competitiveness of domestic companies.

Trade Minister Kim said the broad framework has been agreed upon, but additional detailed negotiations are still needed.

The negotiations involved South Korea's ministries of trade, finance, foreign affairs, agriculture, and the Office for Government Policy Coordination.

The talks intensified after South Korea's new government took office in June, with the August 1 deadline for mutual tariff implementation approaching.