South Korea and the US Finalize Trade Agreement: South Korea Commits to $350 Billion Investment in the US in Exchange for a 15% Tariff on Automobiles and Preferential Tariffs for the Semiconductor Industry

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According to media reports on Wednesday, South Korea and the United States have reached an agreement on the specific terms of a trade deal. South Korea's Chief Policy Official Kim Yong-Beom disclosed key contents of the agreement at a briefing, including South Korea's $350 billion investment plan in the US, auto parts tariff settings, and arrangements for semiconductor tariffs.

According to the details of the agreement, South Korea will invest $350 billion in the United States, of which $200 billion will be cash investment, similar to the arrangement with Japan, with an annual investment cap of $20 billion.

The United States will continue to maintain a comprehensive tariff level of 15%. Both parties agreed to set the tariff on auto parts at 15%. In the semiconductor field, South Korea stated that both parties agreed the applicable tariff level would not put South Korea at a disadvantage. In addition, South Korea obtained most-favored-nation status for pharmaceutical tariffs.

According to previous reports by CCTV News, US President Trump posted letters on his social media platform on July 7 local time to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung, stating that from August 1, 2025, the US will impose a 25% tariff on all Japanese and South Korean products.

After Trump announced the trade agreement with South Korea, the market reacted positively. The Korean won to US dollar exchange rate rose to a daily high, and the Korea Composite Stock Price Index futures and iShares MSCI Korea ETF also went up.

Investment Commitment Implemented in Phases, Key Industries Protected

South Korea's $350 billion investment commitment will be implemented in two parts, with $200 billion as cash investment and an annual investment cap of $20 billion. The investment commitment will be finalized by January 2029. The remaining $150 billion will be used for shipbuilding projects.

This investment scale is similar to the agreement previously reached between Japan and the United States, showing that the Trump administration is adopting a similar model to achieve trade arrangements with major Asian economies.

According to the Korea Herald quoted by Reference News on October 29, US President Trump stated on the 29th that Washington and Seoul are “very” close to finalizing a new trade agreement. He said South Korea is an important economic and security partner of the United States and urged South Korea to increase its investment in US industries.

In the semiconductor field, South Korea has successfully ensured that the tariff level will not undermine its competitiveness. This is crucial for South Korea, as semiconductors are its core export industry.

In the agricultural products sector, Kim Yong-Beom stated that South Korea has successfully resisted calls for further opening of its agricultural market, especially in the rice and beef sectors.

In the auto parts sector, both sides agreed to set tariffs at the 15% level, and South Korea obtained most-favored-nation status for pharmaceutical tariffs.

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