The United States and South Korea have officially cemented a comprehensive partnership covering trade, security, and massive economic investments, as announced by the White House on November 13. This significant development follows the successful summit between President Donald Trump and South Korean President Lee Jae Myung held in Gyeongju, South Korea, last October.
Key Trade and Tariff Agreements
In a major boost to bilateral trade, the two nations have agreed to substantial tariff reductions. US import duties on South Korean goods will be slashed from 25% to 15%, marking a significant relief for Korean exporters. The White House clarified that the US will apply either the higher rate under the US-Korea Free Trade Agreement, the Most Favoured Nation tariff, or a 15% tariff under its reciprocal tariff policy.
For the pharmaceutical sector, the tariffs will not exceed 15%, ensuring smoother trade flow for critical medical products. This tariff restructuring is expected to create new opportunities for businesses in both countries.
Massive Investments and Security Collaboration
The deal encompasses staggering investment commitments totaling $350 billion. This includes $150 billion in Korean investments in the shipbuilding sector that have received US approval, referred to as Approved Investments. Additionally, another $200 billion in Korean investments is anticipated through a Memorandum of Understanding on Strategic Investments, which representatives from both nations are expected to sign soon.
On the security front, President Lee confirmed that South Korea will construct nuclear-powered submarines and collaborate with the US in shipbuilding, artificial intelligence, and the nuclear sector. This represents a significant advancement in the defense capabilities of the alliance.
Boeing Order and Economic Partnerships
In a major win for American manufacturing, the leaders celebrated Korean Air's order of 103 Boeing aircraft equipped with GE Aerospace engines. Valued at approximately $36 billion, this massive order includes various Boeing models such as the 737 MAX, 787 Dreamliner, and 777X passenger and freighter aircraft. This purchase will bring Korean Air's total Boeing orders in 2025 to over 150 airplanes.
Both leaders also expressed strong support for the August announcement by South Korean companies revealing foreign direct investments in the United States totaling $150 billion during President Trump's tenure. The White House noted that both nations will make every effort to support and promote these investments.
The partnership further includes the Buy America in Seoul initiative, where South Korea, in collaboration with state governments, will organize an annual exhibition featuring US companies, including Small and Medium-sized Enterprises, to promote American goods exports into Korea.
