Seoul and Washington agree on details of tariff deal

President Lee Jae Myung and U.S. President Donald Trump shake hands ahead of a special state dinner hosted by the Korean president at the Grand Ballroom of the Hilton Hotel in Gyeongju, North Gyeongsang Province, Wednesday. Yonhap

GYEONGJU, North Gyeongsang Province — Seoul and Washington have reached an agreement on the details of their long-stalled tariff negotiations during Wednesday’s summit between President Lee Jae Myung and U.S. President Donald Trump, held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meetings in Gyeongju.

The breakthrough was reached after the two sides agreed on how Korea will provide its promised $350 billion investment package to the U.S. in return for the U.S. lowering its 25 percent tariff on Korean goods to 15 percent. Korea will provide $200 billion in cash and $150 billion for shipbuilding industry cooperation, with an annual cap of $20 billion.

Presidential chief of staff for policy Kim Yong-beom said in a press briefing after the summit that the two countries had agreed on the detailed terms of the trade agreement framework first reached on July 30, paving the way for renewed stability in bilateral trade relations.

Kim highlighted that one of the key provisions of the deal involves a mechanism to minimize the impact of the $200 billion U.S.-bound investment tranche on Korea’s foreign exchange market.

“Rather than injecting the full $200 billion at once, we agreed to an annual investment cap of $20 billion,” he said. “This approach allows the investment to progress gradually in line with project development, keeping currency fluctuations within manageable limits.”

Kim further explained that the annual investment allocation of $20 billion would operate as a capital call system, meaning funds would be disbursed gradually based on project milestones rather than all at once.

“Each project will receive funding according to its progress,” he said.

He added that the other $150 billion will go into a shipbuilding cooperation fund, dubbed "Make American Shipbuilding Great Again." The fund will be led by Korean firms and include both direct investments and government-backed guarantees.

“This agreement secures a leading role of Korean companies while reinforcing strategic industrial collaboration between Seoul and Washington,” Kim said.

Presidential chief of staff for policy Kim Yong-beom, right, speaks during a press briefing at the International Media Center for APEC in Gyeongju, North Gyeongsang Province, Wednesday. On the left is National Security Adviser Wi Sung-lac. Joint Press Corps

Kim stressed that a series of multilayered safeguards had been established to ensure the recoverability of principal investments under the newly agreed framework.

“We agreed to pursue 'only commercially viable projects,' and the expression is clearly stipulated in the memorandum of understanding,” Kim emphasized. “By ‘commercial viability,’ we mean investments that the joint investment committee determines — on a good-faith basis — have sufficient cash flow to fully recover the invested capital.”

He added that Seoul had also secured provisions allowing future consultations with Washington in the event the U.S. side seeks unilateral investment actions outside the purview of the bilateral review committee. Another safeguard requires each project to be managed by a Korean project manager to ensure transparency and accountability.

While the July agreement lowered the U.S.' 25 percent blanket tariff on all Korean goods to 15 percent, the tariff on Korean cars remained at 25 percent. Now under the finalized deal, Washington will reduce the levy to 15 percent.

In other product categories, the U.S. will provide most-favored-nation treatment for Korean pharmaceuticals and wood products, while aircraft components, generic medicines and natural resources not produced in the United States will be granted full tariff exemptions.

For semiconductors, Seoul and Washington reached a compromise to apply tariff levels that ensure Korea is not placed at a competitive disadvantage compared with its main rival, Taiwan.

Kim said that the move represents “mutual concessions” aimed at strengthening industrial cooperation and stabilizing supply chains between the two nations.

The guestbook entry written by U.S. President Donald Trump at Gyeongju National Museum in Gyeongju, North Gyeongsang Province, Wednesday, prior to his summit with President Lee Jae Myung. Courtesy of presidential office

Finally, Kim emphasized that the two countries had strengthened protective measures in the agricultural sector.

“We agreed to strictly limit any additional market openings in sensitive areas such as rice and beef,” he noted, “while enhancing cooperation and communication between the two sides on quarantine and sanitary procedures.”

The two sides had been engaged in follow-up consultations since the July agreement to resolve differences in the structure and profit-sharing arrangements of the $350 billion fund.

Kim said the discussions were “intensive and exhaustive,” involving 23 ministerial-level meetings and numerous working-level consultations between Korea’s Ministry of Trade, Industry and Energy and the U.S. Department of Commerce.

“The process was extremely intense — during today’s summit, President Trump even referred to Minister of Trade, Industry and Energy Kim Jung-kwan as a ‘tough negotiator,’” Kim said. “In the final stages, I personally held three direct meetings with U.S. Commerce Secretary Howard Lutnick, and all relevant government agencies devoted their utmost efforts to reach this agreement.”