President Trump announced Wednesday he has struck a trade deal with South Korea.
Mr. Trump wrote on Truth Social that South Korean goods will face a 15% tariff — lower than the 25% he threatened earlier this month — while U.S. imports to South Korea will not face tariffs. He said South Korea will be “OPEN TO TRADE” and will accept U.S. automobiles.
South Korea is the latest key U.S. trading partner to reach an agreement with the Trump administration, ahead of a Friday deadline when Mr. Trump says he’ll impose hefty tariffs on dozens of countries.
South Korean President Lee Jae-myung confirmed his country had reached a deal with the U.S. in a Facebook post.
In addition to the 15% tariff, Mr. Trump said South Korea agreed to “give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself.” Lee said the fund will help South Korean companies enter the U.S. market, especially in industries like semiconductors and biotech, and $150 billion of the total $350 billion will focus on shipbuilding.
South Korea will also buy $100 billion dollars’ worth of liquified natural gas or other energy products, and will “invest a large sum of money for their investment purposes,” Mr. Trump said.
South Korea was the U.S.’s sixth-largest trading partner last year, not including multi-country blocs like the European Union, according to Census Bureau data. The U.S. imported $131.5 billion worth of South Korean goods, and South Korea bought $65.5 billion in American goods.
More than $45 billion worth of U.S. imports from South Korea were cars and car parts, according to federal statistics. Cars from South Korea will be subject to the 15% tariffs, rather than the blanket 25% rate that Mr. Trump has imposed on foreign cars and car parts from other countries, Secretary of Commerce Howard Lutnick said on X.
The president also announced a deal with Japan last week and a deal with the 27-nation EU on Sunday. Deals are still outstanding with the U.S.’s three largest single trading partners: Canada, Mexico and China.
Trump strikes trade deals as tariff threats loom
Mr. Trump has spent much of his first six months in office pressing U.S. trading partners to agree to trade deals — and floating large-scale tariffs if they don’t correct what he views as imbalanced trading practices.
Most countries, including South Korea, have faced 10% tariffs since April, when Mr. Trump delayed a set of higher “reciprocal tariffs” for 90 days to buy his administration time to negotiate. Then this month, the president sent letters to South Korea and around two dozen other trading partners telling them to expect higher tariffs starting Friday, Aug. 1, unless deals are reached.
Mr. Trump has stood behind that deadline, writing on Wednesday: “THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE — IT STANDS STRONG, AND WILL NOT BE EXTENDED.”
Trading partners like Indonesia, the Philippines, the EU and Japan have struck trade deals before then — generally agreeing to tariffs that are lower than the ones threatened by Mr. Trump but higher than the 10% baseline.
Meanwhile, negotiations with China, Canada and Mexico remain ongoing. Higher tariffs on Chinese goods are set to take effect on Aug. 12 unless the two countries strike a deal, though an extension is possible, U.S. officials have said.
All told, the president said this week he expects that most imports to the U.S. will face a baseline tariff of 15% to 20%. By comparison, the average tariff rate on U.S. imports in 2023 was around 2.5%, according to figures from the Yale Budget Lab, a non-partisan policy research center.
Mr. Trump has argued his tariff strategy is necessary to correct what he views as unfair trading practices and revive American manufacturing. But many economists warn tariffs can lead to higher inflation and more sluggish economic growth, and some of the president’s early trade moves rattled financial markets.
Consumer prices have been relatively stable so far this year — though above the Federal Reserve’s 2%-per-year target. Some economists say that’s partly because companies have taken steps to prevent short-term shocks from tariffs.
