South Korea’s New Trade Deal with Trump: Key Benefits and Opportunities for Investors and Business Owners
SEOUL, South Korea — President Donald Trump announced a new trade agreement with South Korea on Wednesday that imposes 15% tariffs on South Korean goods. This rate is significantly higher than tariffs from a few months ago but remains below the 25% Trump had threatened.
The deal includes commitments from South Korea to invest $350 billion in the United States and to purchase $100 billion worth of liquefied natural gas. Trump noted on social media that South Korean President Lee Jae Myung will visit Washington within two weeks to announce further details.
Trump had previously warned of a 25% tariff on South Korean imports if a deal was not finalized by Friday. In a notable concession, the agreement sets a 15% tariff on South Korean car exports—lower than the 25% rate already imposed on vehicles from most other countries.
This deal follows a series of trade agreements in Asia. The White House has also set tariffs of 15% on goods from Japan and the European Union, 19% on products from the Philippines and Indonesia, and 20% on Vietnamese goods. Malaysia, Taiwan, and Thailand remain without agreements. India, another key American ally, faces a threatened 25% tariff by Trump. Meanwhile, the U.S. and China have agreed to a trade truce after mutual penalties earlier this year.
President Lee confirmed the trade deal on social media, stating it “removes uncertainty” for South Korea’s export industries. Of the $350 billion investment commitment, $150 billion will help South Korean companies enter the American shipbuilding industry. According to Seungjoo Lee, professor of political science at Chung-Ang University, South Korea’s strength in shipbuilding made it a key partner, especially considering China’s status as a strategic rival.
Additional investments will support South Korea’s semiconductor, technology, and energy sectors in the U.S. Kim Yong-beom, chief policy coordinator to President Lee, said that South Korea had sought a 12.5% tariff “until the very end” but the U.S. remained firm at 15%.
The negotiation process was complicated by the transition to a new South Korean government in June and extended deadlines granted by Trump. The talks had to compete for attention with multiple other trade discussions addressing complex issues like agricultural market access.
U.S. Commerce Secretary Howard Lutnick confirmed the 15% tariff on South Korean automobiles, aligning with rates on vehicles from Japan and the EU. He affirmed that South Korea will be treated equivalently to other countries regarding semiconductors and pharmaceuticals tariffs, while U.S. tariffs on imported steel, aluminum, and copper will remain unchanged.
South Korea’s semiconductor leaders, SK Hynix and Samsung, have expanded U.S. production facilities with subsidies from the Biden administration. However, prospects for other large South Korean manufacturing investments have dimmed following the cancellation of certain electric vehicle subsidies by the U.S. Congress. Recently, Korean executives from Hyundai, Samsung, and Hanwha met in Washington to discuss investment plans.
Tami Overby, a government relations expert and former president of the American Chamber of Commerce in Korea, described South Korea’s investment commitment as a necessary response to increased tariffs making their exports less competitive in the U.S. market. “I don’t think they have a choice,” she said, highlighting the administration’s strict trade stance.
South Korea’s export-dependent economy, with goods and services accounting for 44% of its GDP in 2023, benefits strongly from its large trade surplus with the U.S., which totaled $66 billion in 2024. U.S. auto tariffs have pressured South Korean car makers, with Hyundai reporting a 16% profit decrease in Q2 compared to last year due to absorbing tariff costs.
U.S. officials have pushed South Korea to balance trade, open markets to American exports, and reconsider digital regulations seen as favoring South Korean companies. Trump’s announcement, however, did not address digital service issues.
Trump claimed the $350 billion investment from South Korea will be “owned and controlled by the United States, and selected by myself, as President,” and asserted that South Korea “will be completely OPEN TO TRADE with the United States” including cars, trucks, and agricultural products. Yet, South Korean officials clarified that no changes were agreed upon regarding agricultural import rules, particularly for beef and rice, which remain politically sensitive.
South Korea is the largest foreign market for U.S. beef, but disputes continue over restrictions on beef older than 30 months, banned since 2008 over mad cow disease concerns.
The trade deal focuses solely on trade issues, excluding matters such as defense cost-sharing, which South Korea’s government said would be discussed separately during upcoming presidential meetings.
Trump, who last year described South Korea as a “money machine,” has used trade talks to press the country to contribute more to the costs of U.S. military presence, which includes around 28,500 troops in South Korea.
This article originally appeared in The New York Times.
Special Analysis by Omanet | Navigate Oman’s Market
The new US-South Korea trade deal, imposing 15% tariffs on South Korean goods, signals a shift towards more protectionist policies that could disrupt global supply chains and increase costs for exporters—including those in Oman linked to these markets. For Omani businesses, this raises the importance of diversifying export destinations and supply sources to mitigate tariff-related risks. Smart investors should watch for shifts in Asian manufacturing hubs and prioritize sectors aligned with rising US investments, particularly in technology, energy, and shipbuilding, to capitalize on new growth avenues.
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