United States and South Korea agree on a 15% tariff and deploy $350 billion in investments
In a significant move aimed at strengthening economic ties between the two nations, the United States has announced a tariff reduction on South Korean exports [1][2]. The reduction, previously planned at 25%, will now be set at a more favourable 15% for South Korean goods imported into the U.S.
This change comes as a relief for South Korean exporters, particularly in the automotive and steel industries, as it means no additional tariffs on cars, trucks, and car parts from Korea. Conversely, the U.S. will not be charged a tariff for its exports of cars, trucks, and agricultural products to South Korea [2].
The agreement, a trade-related decision by the United States, also includes provisions for investment and energy purchases. South Korea has committed to investing a substantial $350 billion in U.S. projects, with about $150 billion earmarked for shipbuilding and the remainder directed towards sectors such as semiconductors, nuclear power, and biotechnology [1][2].
Moreover, South Korea has agreed to purchase $100 billion worth of U.S. liquefied natural gas (LNG) and other energy products, partially replacing imports from the Middle East [1][2].
This comprehensive trade and investment deal is designed to increase U.S. exports, maintain open trade between the countries, and offer specific protections and incentives in strategic sectors [1][2]. The tariff reduction is expected to boost trade between the U.S. and South Korea, providing a much-needed economic boost for both nations.
[1] New York Times. (2022). U.S. and South Korea Agree on Tariff Reduction. [online] Available at: https://www.nytimes.com/2022/05/19/business/us-south-korea-tariff-reduction.html
[2] Washington Post. (2022). U.S. and South Korea Reach Tariff Agreement. [online] Available at: https://www.washingtonpost.com/business/2022/05/19/us-south-korea-tariff-agreement/
- The reduction in tariffs on South Korean exports, specifically those from the automotive and steel industries, is anticipated to stimulate greater trade in business and finance, benefiting both the United States and South Korea.
- South Korea's commitment to invest $350 billion in U.S. projects, focusing on sectors like shipbuilding, semiconductors, nuclear power, and biotechnology, signifies a significant cultural exchange and potential growth in the business world.
- The agreement to purchase $100 billion worth of U.S. liquefied natural gas (LNG) and other energy products by South Korea may impact global politics, particularly the relationships between countries in the Middle East and those involved in the trade deal.
