South Korea reaches last-minute deal with US on 15% tariffs

South Korea reached a last-minute trade agreement with the United States on Wednesday, July 31, limiting customs surcharges on most of its products to 15% instead of the 25% that Donald Trump had threatened to impose, a relative relief for Asia's fourth-largest economy, which is heavily dependent on its exports.

"We have reached an agreement on 15% tariffs for South Korea," the US president announced on his network, Truth Social. He stressed that Seoul had committed, as part of this agreement, to invest 350 billion dollars (305.63 billion euros) in the United States, and to purchase 100 billion dollars of American liquefied natural gas (LNG) and other energy sources over the next 3.5 years.

Donald Trump then invited his South Korean counterpart, Lee Ja-myung, to Washington "within two weeks." This will be his first visit to the United States since he came to power on June 4.

"With this agreement, the government has eliminated uncertainty surrounding export conditions and ensured that US tariffs on our exports are lower than or equal to those imposed on our major trading competitors," Mr. Lee said on his Facebook page. "This creates an environment in which our companies can compete on equal terms, or even more favorable terms, with major global players," he added.

South Korean President Kim Yong-bum's chief of staff clarified during a press briefing that automobile exports, a key sector hit by a 25% US surcharge since April, would benefit from the new reciprocal rate of 15%.

"For semiconductors and pharmaceutical products, which were to be subject to tariffs in the future, Korea should receive treatment at least as favorable as that granted to other countries," Kim added without elaborating.

The US market accounts for half of South Korea's car exports, which account for 27% of the country's total exports to the United States. However, "steel, aluminum, and copper are not included and remain unchanged," US negotiator Howard Lutnick said on X. Steel and aluminum have been subject to 50% surcharges since June.

The South Korean president specified that of the $350 billion fund included in the agreement to encourage his country's companies to invest in the United States, $150 billion would be allocated to shipbuilding, and the rest to sectors such as semiconductors, batteries, biotechnology and energy.