Just a day before a looming tariff deadline on 1 August, US President Donald Trump announced a new trade agreement with South Korea – one that imposes a 15% tariff on goods from one of America’s key trading partners, despite claiming it will bring billions in American-controlled investments, CNN reported on Wednesday.
A $350 Billion Deal, Says Trump
In a post on Truth Social Wednesday, Trump declared the deal as a financial win for the US. “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,” he wrote.
The announcement comes ahead of the expiration of a previously paused 25% “reciprocal” tariff that had briefly affected South Korean goods back in April. That pause was set to lift this Friday on 1 August.
Tariffs Stay High Despite Deal
Even with the new deal in place, South Korean goods will still face a 15% tariff — significantly higher than the 10% minimum rate imposed on dozens of countries since April. It was not immediately clear whether South Korea managed to secure relief from other sector-specific tariffs, such as the 25% tariff on autos, which has long been a sticking point in the trade talks between the two economic powers.
Trump recently rolled out similar 15% tariffs on goods from the European Union and Japan, while striking parallel trade deals with those nations. In Japan’s case, negotiations included efforts to reduce tariffs on cars and pharmaceuticals. South Korea has reportedly been lobbying for similar relief, especially on autos, which happens to be the coubntry’s major export sector.
What’s At Stake for Both Sides
South Korea is currently the seventh-largest exporter to the US, shipping $132 billion worth of goods in 2024, CNN reported, citing date from the US Commerce Department.
According to the report, top exports include automobiles, semiconductors, and electronics. In return, the US exported $66 billion worth of goods to South Korea, led by oil, gas, and industrial machinery.
The two countries have a long history of free trade agreements, many of which were renegotiated during Trump’s previous term in office. But recent tariffs have reportedly been putting serious pressure on South Korea’s economy as the country’s GDP unexpectedly shrank at an annual rate of 0.1% in the first quarter of this year, in a first such contraction in four years.
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