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South Korea & U.S Strike Deal To Lower U.S Tariffs On Seoul’s Imports To 15%
South Korea and the U.S signed a deal to reduce U.S tariffs on the former’s imports to 15% from the proposed 25%. In return, Seoul would invest $350 billion in the U.S.
It will be used to offer loans and investments, allowing Korean shipbuilders to expand and solidify their position in the U.S. market.
The idea of the Korean investment was being discussed for months as a bargaining chip in trade negotiations between the two countries.
The news came after Japan decided on a USD 400 billion industrial investment.
President Trump, however, gave a different message on social media, saying Seoul would provide the U.S. with $350 billion for investments controlled by the U.S. and ‘selected by myself’.
U.S. shipbuilding centres around its defence sector, which has been the target of top Korean shipyards for many years.
Korea’s Big Three have skills and expertise; however, they face a reduction in market share due to a shortage of labour in the country and competition from China.
With yards in the United States, they could show their capabilities to the largest shipowning companies in the world and the U.S Navy, which has more workforce, resources and a valuable fleet.
Its annual expenditure on new shipbuilding is around 30 billion dollars, 15% of all merchant ship orders worldwide in 2024.
A Korean Shipbuilding executive said that the U.S market is about warships rather than commercial ships.
Korean shipbuilder Hanwha has begun overseas ship repair services for the Military Sealift Command.
Like the Japanese deal, the Korean one is also a commitment and does not include specific projects or an investment timeline as of now.
For Korea, short-term gains are vital, as without this agreement, the U.S tariffs on Korean autos and other exports would have increased to 25%, undercutting their competitiveness in the profitable American consumer market.
South Korea’s President Lee Jae Myung said that they had overcome a challenge, and the deal eliminated uncertainty in the export sector.
Korea also said it would spend $100 billion to purchase U.S energy products, including LNG, over the course of Trump’s regime.
The European Union also promised to buy $250 billion worth of American energy products annually over the same period, an amount that several analysts say is not likely to be achieved.
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