President Donald Trump announced a “full and complete trade deal” with South Korea on Thursday evening — an agreement committing $350 billion in investment into the United States and significantly eroding Korean automaker advantages in the U.S. market.
The Korean team did manage, however, to convince Washington to accept a deal that did not require South Korea to increase its imports of American beef or rice, a point of significant contention during prior negotiation sessions.
South Korea agreed to a 15 percent tariff on its goods entering America, compared to the 25 percent rate that would have been implemented if the two countries did not come to an alternative agreement by August 1. Trump also agreed to meet South Korean President Lee Jae-myung, a leftist who came to power with minimal foreign policy experience in June, for a summit to detail the provisions in the trade agreement.
Lee’s administration struggled in the past month to attract sufficient attention from the White House to cut a deal. A scheduled meeting between American Treasury Secretary Scott Bessent and Korean Finance Minister Koo Yun-cheol fell through last week after the White House unceremoniously canceled it due to alleged scheduling conflicts. Koo made it to Washington this week, however, alongside Samsung executive chairman Lee Jae-yong and offering an ambitious program to help America dramatically increase its ability to build and maintain new ships, branded “MASGA [Make American Shipbuilding Great Again].”
MASGA was apparently enough to get the White House to drop agricultural demands, but the scale of investments Seoul has promised into the American economy has alarmed some in the conservative opposition People Power Party (PPP).
President Trump celebrated the agreement in a message posted to his website Truth Social in which he also announced plans to meet Lee Jae-myung and congratulated him on his victory in the South Korean special presidential election in June. Lee, who lost the 2022 election to conservative former President Yoon Suk-yeol, won comfortably in the special election called after Yoon’s failed attempt to impose military rule on the country and his subsequent impeachment and ouster.
“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,” Trump wrote. “Additionally, South Korea will purchase $100 Billion Dollars of LNG [liquified natural gas], or other Energy products and, further, South Korea has agreed to invest a large sum of money for their Investment purposes.”
“It is also agreed that South Korea will be completely OPEN TO TRADE with the United States, and that they will accept American product including Cars and Trucks, Agriculture, etc,” he added. “We have agreed to a Tariff for South Korea of 15%. America will not be charged a Tariff.”
Trump also congratulated Lee, announced that Lee would visit the White House within two weeks, and applauded South Korea generally for its economic and political success.
Lee’s chief of staff for policy, Kim Yong-beom, emphasized the importance of not expanding beef and rice imports from America in comments to reporters on Thursday.
“It’s true that during our discussions with the United States, there was a strong demand to open our agricultural and livestock market,” the Korea JoongAng Ilbo quoted Kim as saying. “However, considering food security and the sensitivity of agriculture, we agreed not to further open the domestic rice and beef markets.”
The presidential aide insisted South Korea was “not treated unfavorably compared to other countries” and, while playing up what Seoul considers wins in the agreement, warned that “the restructuring of the international trade order [during the Trump era] is expected to continue to accelerate.”
“We must wisely navigate the rapidly changing external environment through flexible, pragmatic diplomacy focused on national interests,” he asserted.
JoongAng noted that, while the Lee administration had appeared to successfully protect the domestic beef and rice markets, this had come at the price of increased tariffs on Korean cars. Since 2016, the U.S. had agreed to a free trade agreement that allowed South Korea to import cars into the United States while paying no tariffs. That fee is now 15 percent, which Trade Minister Yeo Han-koo called “regrettable.” JoongAng predicted that Kia and Hyundai would be among the most negatively affected, citing experts who expected the companies to freeze prices and accept the profit losses to remain competitive in the American market.
“We strongly argued that, given the FTA, Korea should receive a 12.5 percent auto tariff to be on equal footing with Japan and the EU, but failed to persuade them,” Yeo reportedly admitted.
Japan and the European Union are among the six entities to have secured trade deals before South Korea. The other four are the United Kingdom, Indonesia, Vietnam, and the Philippines.
The shipbuilding initiative appeared to have played a major factor in the White House accepting a trade deal. South Korean officials stated that MASGA would be worth $150 billion in Korean investments in America and require the construction and rehabilitation of shipyards throughout the United States. Korean companies would also help their American counterparts maintain the sites once completed, allowing for a significant boost in America’s shipbuilding abilities.
Trump officials also described the determination on the part of Korean negotiators to meet with the American team as a factor in ensuring a deal. After the cancelation of Friday’s meeting, Commerce Secretary Howard Lutnick revealed that Korean negotiators following the Trump cabinet to Scotland this weekend, where Trump had scheduled a brief visit.
“The South Koreans flew to Scotland to meet with me and [US Trade Representative Jamieson Greer] after dinner,” Lutnick reportedly told Fox News. “I mean, think about how much they really, really want to get a deal done.”
While reaching an agreement prevented South Korean goods from being subject to a 25 percent American tariffs, PPP leaders expressed concern that the investment commitments, particularly as part of MASGA, were unrealistic.
“We are now looking at $450 billion in U.S.-bound investments and purchases, including the $100 billion energy purchases and $350 billion investment, which exceeds our foreign exchange reserves,” PPP interim leader Song Eon-seog explained on Friday.
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