Just days after taking office, former President Donald Trump signed a new bilateral trade deal with South Korea. This framework agreement includes landmark energy purchase and investment commitments. Trump first proposed the idea on his social media platform Truth Social. He announced that Seoul will purchase $100 billion of liquefied natural gas (LNG) and other energy products in America. This agreement is a significant advance in creating much needed economic ties between the two countries while removing the burden of past tariff threats.
In addition to the energy purchases, Trump indicated that South Korea would invest “a large sum of money for their Investment purposes.” The actual size of this investment was not revealed. South Korea’s President Lee Jae-myung confirmed that his country had successfully concluded tariff negotiations with the United States, following a comprehensive strategy refinement process and consideration of diverse opinions.
We will continue to put diplomacy first in the national interest as our first principle.” He further touted that US goods will not face any new tariffs through this new agreement. As of 2024, the effective tariff rate for goods imported from the United States into South Korea is an estimated 0.79%. This new deal represents a… huge victory. That means the new deal cuts those duties almost in half! It reduces the previously proposed 25% tariff, which Trump teased in a letter earlier this month.
Lee Jae-myung emphasized an impressive $350 billion fund for the trade deal. This new initiative, announced jointly with the Mayors’ signings, intends to increase opportunities for bilateral investment. Lee further remarked that this initiative “will play a role in facilitating the active entry of Korean companies into the US market in industries where we have strengths, such as shipbuilding, semiconductors, secondary batteries, biotechnology, and energy.”
The agreement is one of the strongest steps towards a more economic collaboration between US-South Korea in the area of in-kind technical licensing. Like both nations prioritize each other’s security and identities. They intend to do this by minimizing tariffs.