South Korea gets 15% tariff after trade deal with US, Lee pledges S$453 billion investment fund

Just three days ahead of U.S. President Donald Trump's Aug. 1 tariff deadline, South Korea has struck a trade deal with the U.S., resulting in their Trump-imposed tariffs being reduced from 25 per cent to 15 per cent.

Trump announced the "Full and Complete Trade Deal" with South Korea on Truth Social on Jul. 30, following meetings with South Korean officials at the White House on the same day.

Terms of the deal

As part of the deal, South Korea will invest US$350 billion (S$453 billion) in U.S. owned and controlled goods, subject to Trump's preference, he said.

South Korea's President Lee Jae Myung added on Facebook that of this amount, US$150 billion (S$194 billion) will be set aside for shipbuilding cooperation between both countries.

Other terms of the trade deal involve South Korea agreeing to purchase US$100 billion (S$129.4 billion) worth of liquefied natural gas and other energy products, Trump announced.

The exact amount of the total investments will be announced by Lee on his visit to the White House within two weeks.

Trump also said that South Korea "will be completely OPEN TO TRADE with the United States"and accept American goods including cars, trucks and agricultural products, while no mutual tariff will be imposed on the U.S.

"A major hurdle"

The deal between both countries comes amid a wave of last-minute global trade activities with the U.S., as countries attempt to meet the Aug. 1 deadline.

Trump and U.S. commerce secretary Howard Lutnicik said in early July that countries have until the deadline to negotiate a trade deal or face potentially higher levies, and began sending warning letters to trade partners shortly after.

In his post, Lee said that his government has "overcome a major hurdle" by securing the trade deal.

He added that the new agreement will allow South Korea to compete on equal or superior terms with major countries.

Lee also said this agreement is the result of the convergence of U.S. interest in rebuilding the manufacturing sector and Korea's commitment to enhancing competitiveness of Korean companies in the U.S. market.

South Korea, a superpower in shipbuilding, semiconductors and other technology products, previously faced a 25 per cent tariff in Trump's first slate of warning letters to Asian trading partners.

The new 15 per cent tariff is around those imposed on Japan and the European Union (EU) following their recent trade deals with the U.S.

India and Brazil were also among the latest to secure trade deals with the U.S. on Jul. 30, and now face 25 per cent and 50 per cent tariffs respectively.

Top images via The White House/Facebook & Lee Jae Myung/Facebook