The United States and South Korea have concluded a new bilateral trade agreement that sets a 15% tariff on South Korean imports, down from a previously threatened rate of 25%.
The deal, announced by President Donald Trump via Truth Social, was finalised in Washington following a series of rapid negotiations ahead of a 1 August deadline for wider tariff hikes.
The agreement includes a South Korean commitment to invest $350 billion in U.S.-based projects, alongside a pledge to purchase $100 billion in American energy products over a 3.5-year period. Trump described the deal as “full and complete,” and highlighted that South Korean exports—particularly in sectors such as shipbuilding, semiconductors, batteries, and biotechnology—will now face a uniform 15% duty rate when entering the U.S. market. Meanwhile, American exports, including agricultural goods and vehicles, are to enter South Korea duty-free, though Seoul’s rice and beef sectors will remain protected.
South Korean President Lee Jae Myung, who took office in June following a snap election, confirmed that the deal had resolved uncertainty in trade conditions and that the agreed U.S. tariff rate was “lower than or equal to” those imposed on Korea’s key competitors. President Lee is expected to visit Washington within the next two weeks for a bilateral meeting with Trump.
South Korea’s investment commitment—valued at $350 billion—is to be directed at projects selected by the U.S. president. According to Kim Yong-beom, policy chief in the South Korean presidential office, the fund includes $150 billion earmarked for shipbuilding initiatives and $200 billion for strategic technologies including chips, batteries, biotechnology, and nuclear power. Many of the projects, Kim acknowledged, are extensions of existing investment plans.
The deal also obliges South Korea to source $100 billion worth of American energy products—specifically liquefied natural gas (LNG), liquefied petroleum gas (LPG), crude oil, and a small quantity of coal. Kim stated that this figure aligns with South Korea’s existing import volumes, though it may shift some procurement away from Middle Eastern suppliers.
U.S. Commerce Secretary Howard Lutnick claimed via social media that 90% of profits from the $350 billion investment would benefit “the American people.” In response, South Korean officials suggested they interpret this to mean that profits would be reinvested into the U.S. economy. Questions remain regarding the structure, oversight, and binding nature of the investment arrangements, with no full text of the deal yet released.
The new tariff regime will notably apply to South Korean automotive exports. Semiconductor and pharmaceutical products will not face discriminatory treatment compared to other countries, while steel, aluminium, and copper are not covered under this agreement.
The deal follows a broader push by the Trump administration to renegotiate trade terms with major economic partners on a bilateral basis. Earlier this month, a similar 15% tariff arrangement was reached with the European Union. Japan also secured terms at that level. These moves come as Trump seeks to implement a new trade policy framework before the start of August, which he has designated as a deadline for imposing higher tariff rates across the board.
In Seoul, the outcome was seen as a pragmatic compromise. Former South Korean trade minister Cheong In-kyo commented that the government had “avoided the worst” by securing the deal and characterised it as “the next best” option under the circumstances.
Negotiations took place amid political turbulence in South Korea. Former president Yoon Suk Yeol was removed from office in April following impeachment proceedings related to an alleged attempt to impose martial law. President Lee’s government, therefore, faced significant domestic pressure to conclude a deal before the August deadline, particularly in light of South Korea’s record $55.7 billion trade surplus with the United States last year.
The pressure intensified after Japan clinched its own agreement with Washington earlier in July. In the final stages of negotiations, South Korean tech giants Samsung Electronics and LG Energy Solution announced significant deals with Tesla—valued at $16.5 billion and $4.3 billion respectively—suggesting a strategic alignment with U.S. industrial policy.
While the new deal does not replace the existing Korea–US Free Trade Agreement (KORUS), it overlays a separate set of tariff and investment measures, which analysts suggest could complicate long-term trade governance.
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