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U.S. and South Korea Ink Major Trade Deal, Boosting American Investment
Washington D.C. – After months of negotiation, the United States and South Korea have finalized a significant trade agreement, promising reduced tariffs for the East Asian ally in exchange for a substantial influx of investments into the U.S. economy.
The new deal sets the tariff rate on South Korean goods at 15%, a notable decrease from the previous 25% imposed on automobiles. This adjustment aims to foster a more open and mutually beneficial trade relationship.
A cornerstone of the agreement is South Korea’s pledge of $350 billion in investments towards the United States. This commitment will be fulfilled through a combination of $200 billion in cash and an additional $150 billion dedicated to U.S. shipbuilding initiatives. South Korea plans to disburse the cash portion through annual installments of up to $20 billion.
Further bolstering the economic ties, the deal includes a major purchase by Korean Air, South Korea’s largest airline, of 103 new Boeing aircraft, valued at an estimated $36.2 billion. Additionally, Amazon is set to invest $5 billion into South Korea’s cloud infrastructure as part of the comprehensive agreement.
This trade deal follows a period of heightened tariff discussions initiated by President Donald Trump, who has frequently used the threat of increased tariffs as leverage to secure investments in American manufacturing. This strategy mirrors a similar agreement reached with Japan in July, where tariffs were lowered to 15% in exchange for a $550 billion investment from the island nation.
President Trump was recently hosted by South Korea, where he received the Grand Order of Mugunghwa, the country’s highest civilian honor, and a ceremonial crown from South Korean President Lee Jae Myung.
While the U.S. has pursued a similar approach with China, threatening 100% tariffs, a framework agreement between the two economic powerhouses this week suggests a potential de-escalation. However, if a deal fails to materialize, China’s total tariff rate could potentially reach 157%, particularly as the nation, which holds the world’s largest rare earth mineral reserves, prepares to restrict their export.