The U.S. will impose a 15% tariff on imports from South Korea under a new trade deal that also includes a $350bn (about £264bn) South Korean investment in the U.S., President Donald Trump has announced.

The agreement was reached one day before a 1 August deadline for countries to avoid higher tariffs. South Korea had faced a 25% levy if no deal was struck.

The 15% rate will apply to cars and semiconductors, two of Seoul’s largest exports to the U.S., while steel and aluminium will continue to be taxed at 50% under a global tariff President Trump introduced earlier this year.

South Korean President Lee Jae Myung welcomed the deal, saying it put his country on “an equal or better footing” with key competitors such as Japan, which secured the same tariff rate earlier this week.

As part of the pact, Seoul will invest $350bn in the U.S., including $150bn to support shipbuilding, a sector where South Korea is the world’s second-largest producer after China. Much of the remaining investment comprises funds pledged under the Biden administration for car, semiconductor and battery production.

South Korea retained restrictions on U.S. rice and beef imports, avoiding concessions that had angered domestic farmers.

The agreement does not affect the military alliance with Washington, but further negotiations on defence costs are expected when President Lee visits The White House in two weeks’ time.

Copied