Just over two weeks ago, on October 29, South Korean President Lee Jae-myung met with U.S. President Donald Trump to finalize a landmark tariff and security agreement that could reshape trade and defense ties between the two nations.
The deal hinges on a massive $350 billion commitment from South Korea: $150 billion to supercharge its shipbuilding sector and another $200 billion in strategic investments. In return, the U.S. will cut tariffs on key South Korean exports to a reciprocal rate of 15%. This includes automobiles, auto parts, timber, lumber and wood derivatives, and pharmaceuticals, all capped at 15%.
President Trump's administration also agreed to drop supplemental tariffs on several products from the list of Potential Tariff Adjustments for Aligned Partners, covering generic pharmaceuticals, key ingredient imports, natural resources that the U.S. can't source domestically, as well as certain aircraft parts.
Industry experts warn that it could take one to two months for companies to feel the relief. Right now, with existing tariffs still in place, South Korean exporters in affected sectors are grappling with short-term liquidity pressure. "Fundamentally, the U.S. tariff issue hasn't disappeared," explains Kim Pill-soo, a professor at Daelim University College.
On the security front, the two sides renewed their commitment to a "modernized alliance." The U.S. pledged extended deterrence, while South Korea plans to ramp up defense spending to 3.5% of its GDP as soon as possible. Seoul will also boost support for U.S. Forces Korea to $33 billion according to local legal requirements and spend $25 billion on U.S. military equipment purchases by 2030. The U.S. even greenlit South Korea's move to build nuclear-powered attack submarines. 🚢🔒
As this deal kicks in over the coming months, keep an eye on how it affects shipyards, auto plants and beyond. This mega agreement shows two allies doubling down on trade and security—and we're here for it! 🌏✨
Reference(s):
cgtn.com
