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U.S., S. Korea Strike Tariff, Defense Deal
(MENAFN) Washington and Seoul formalized a sweeping tariff and defense pact Friday following the release of an official joint statement detailing the October 29 summit between South Korean President Lee Jae-myung and U.S. President Donald Trump.
Under the strategic investment memorandum, South Korea pledged $150 billion toward American shipbuilding ventures—already greenlit by Washington—plus an additional $200 billion commitment, securing reduced U.S. import duties in return.
Washington will impose a 15 percent reciprocal tariff on qualifying South Korean goods, slash levies on vehicles, automotive components, timber, lumber, and wood products to 15 percent, and cap pharmaceutical tariffs at the same rate.
American officials plan to eliminate supplemental duties on items listed under the Potential Tariff Adjustments for Aligned Partners framework, encompassing generic medications, active pharmaceutical ingredients, domestically unavailable natural resources, and select aviation equipment and components from South Korea.
South Korean media noted that the fact sheet did not specify when the United States will lower the current 25 percent tariff on automobiles and auto parts to 15 percent.
South Korean industry analysts warn that affected businesses won't see immediate relief despite the accord. A news website, quoting an unnamed automotive sector insider, indicated implementation could require one to two months, leaving corporations vulnerable to severe near-term cash flow constraints.
Media analysis pointed out that Korean automobile exports to the United States had previously enjoyed zero tariffs, and determining how to cope with the impact of U.S. tariffs on South Korea's automotive industry will be a new challenge. Kim Pill-soo, a professor at Daelim University College, stressed that fundamentally, the U.S. tariff issue has not disappeared.
On the defense front labeled a "modernized alliance," Washington reconfirmed extended deterrence guarantees while Seoul disclosed intentions to accelerate defense expenditure to 3.5 percent of gross domestic product.
South Korea also shared its plan to provide comprehensive support for the U.S. Forces Korea amounting to 33 billion dollars in accordance with Seoul's legal requirements while committing to spending 25 billion dollars on U.S. military equipment purchases by 2030.
The United States gave approval for South Korea to build nuclear-powered attack submarines.
Under the strategic investment memorandum, South Korea pledged $150 billion toward American shipbuilding ventures—already greenlit by Washington—plus an additional $200 billion commitment, securing reduced U.S. import duties in return.
Washington will impose a 15 percent reciprocal tariff on qualifying South Korean goods, slash levies on vehicles, automotive components, timber, lumber, and wood products to 15 percent, and cap pharmaceutical tariffs at the same rate.
American officials plan to eliminate supplemental duties on items listed under the Potential Tariff Adjustments for Aligned Partners framework, encompassing generic medications, active pharmaceutical ingredients, domestically unavailable natural resources, and select aviation equipment and components from South Korea.
South Korean media noted that the fact sheet did not specify when the United States will lower the current 25 percent tariff on automobiles and auto parts to 15 percent.
South Korean industry analysts warn that affected businesses won't see immediate relief despite the accord. A news website, quoting an unnamed automotive sector insider, indicated implementation could require one to two months, leaving corporations vulnerable to severe near-term cash flow constraints.
Media analysis pointed out that Korean automobile exports to the United States had previously enjoyed zero tariffs, and determining how to cope with the impact of U.S. tariffs on South Korea's automotive industry will be a new challenge. Kim Pill-soo, a professor at Daelim University College, stressed that fundamentally, the U.S. tariff issue has not disappeared.
On the defense front labeled a "modernized alliance," Washington reconfirmed extended deterrence guarantees while Seoul disclosed intentions to accelerate defense expenditure to 3.5 percent of gross domestic product.
South Korea also shared its plan to provide comprehensive support for the U.S. Forces Korea amounting to 33 billion dollars in accordance with Seoul's legal requirements while committing to spending 25 billion dollars on U.S. military equipment purchases by 2030.
The United States gave approval for South Korea to build nuclear-powered attack submarines.
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