US tariff deal to face bumpy road over interpretation

In this photo uploaded on the White House's official X (formerly Twitter) account, U.S. President Donald Trump poses with Korean delegation members after reaching an agreement in the two countries' tariff negotiations at the White House, Wednesday (local time). Fourth from left is Korea's Minister of Trade, Industry and Energy Kim Jung-kwan, and sixth from left is Deputy Prime Minister Koo Yun-cheol. Captured from X

The much-anticipated tariff deal between Korea and the United States was struck Thursday, to cut “reciprocal” tariffs on Korean goods to 15 percent. However, uncertainty persists as crucial details remain unresolved.

With no written form of the deal, concerns are being raised over potentially contentious disputes on the agreement's interpretation.

Announcing the deal, U.S. President Donald Trump wrote on his social media, Truth Social, that Korea has agreed that it “will be completely OPEN TO TRADE with the United States, and that they will accept American product including Cars and Trucks, Agriculture, etc.”

However, the Korean government offered a different perspective, noting that there are no further openings for agricultural products in the deal struck between the two countries.

"(Trump’s comment) is the expression of a political leader, which we understand as such. What really matters is what was discussed between the ministers and counterparts that were responsible for each negotiation … And there was no discussion or agreement at all regarding agricultural and livestock products,” Kim Yong-beom, presidential chief of staff for policy, said during a briefing Thursday.

Kim Yong-beom, presidential chief of staff for policy, speaks during a briefing at the presidential office in Yongsan District, Seoul, Thursday. Yonhap

The deal also includes Korea’s $350 billion in investments in the U.S. and the purchase of $100 billion worth of the U.S. liquefied natural gas (LNG) and energy products over the next four years.

Trump also wrote, “The Deal is that South Korea will give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself, as President."

U.S. Secretary of Commerce Howard Lutnick also wrote on X (formerly Twitter) that 90 percent of the profits will be “going to the American people,” to which Korea’s Trade Minister Yeo Han-koo commented: “There are still several ambiguous areas at this point. It seems these details will be clarified as the agreement is implemented.”

Kim also said the ratio — 90 to 10 — hasn’t been decided and the two sides need more detailed discussions on the topic.

“How the fund will be established hasn’t been decided, like who invests how much to where, so a 90 to 10 ratio is not what we can reasonably infer,” Kim said.

He said the ratio may come from an earlier deal between Japan and the U.S.

“These things will become materialized during follow-up discussions … but it will take quite a long time, and I believe Korea will have a chance to express our stance so the fund can be managed in a way of not harming Korea’s interest.”

U.S. Commerce Secretary Howard Lutnick's post on social media / Captured from X (formerly Twitter)

The Korean arrangement might echo the one with Japan, which struck a similar agreement with the U.S. earlier: a 15 percent tariff, $550 billion in investments in U.S. industries and expanding agricultural and energy imports from the U.S.

Soon after the deal was announced, Japan and the U.S. faced major differences in how each country understands the investment promises, given the lack of documentation of the joint agreement. The U.S. said it expects to receive 90 percent of the profits. Meanwhile, Japan noted it would offer a blend of investments, including loans and loan guarantees, which will total up to $550 billion, rather than direct investment, and that the profits will be allocated based on the committed risk and financial contributions from each country.

Regarding Alaska’s LNG project, Trump said that Japan will help form a joint venture. However, the White House’s fact sheet said the two countries are “exploring a new offtake agreement” for Alaskan LNG, leaving room for interpretation.

Professor Ku Ki-bo of Soongsil University’s department of global commerce said the details of the investments will be determined by the private sector.

“The main investors are not state sectors, but private enterprises,” he said. “Governments may offer financial guarantees or credit support to facilitate these investments, but ultimately, whether or not the investments are made depends on the profitability decisions of private companies. The government itself cannot force them to invest.”

He noted that the U.S.’ comment about 90 percent of profit going back to its industry can be interpreted as reinvestment.

“These profits will often be reinvested into expanding facilities and operations, rather than being fully repatriated to Korea,” he said.

While there’s a possibility that the upcoming summit between President Lee Jae Myung and Trump will involve further discussion to work out the details, the professor said there’s no guarantee.