The United States will reduce import duties on South Korean automobiles to 15%, effective retroactively from 1 November, according to an announcement by U.S. Commerce Secretary Howard Lutnick on Tuesday.
In a statement posted on X, Lutnick said that the move unlocks the "full benefit" of South Korea's trade deal with President Donald Trump.
"In response, the U.S. will lower certain tariffs under the deal -- including auto tariffs -- to 15%, effective November 1. We are also removing tariffs on airplane parts and will 'un-stack' Korea’s reciprocal rate to match Japan and the EU."
The bilateral trade deal also caps any future national security tariffs on semiconductors and pharmaceuticals at 15%, putting South Korea on an equal footing with key Asian rivals Japan and Taiwan.
The U.S. previously levied a 25% tariff on imports from South Korea, including national security-related autos duties invoked under Section 232 of the Trade Expansion Act of 1962 and "reciprocal" tariffs invoked under the International Emergency Economic Powers Act of 1977.
The tariff reduction follows a trade agreement reached last month between the U.S. and South Korea, which included provisions for adjustments in import duties as part of broader economic cooperation.
Lutnick confirmed that the reduction in tariffs come after South Korea introduced a bill aimed at implementing investment pledges made to the U.S., further solidifying the two countries' economic ties.
The move is expected to benefit South Korean automakers by making their vehicles more competitively priced in the U.S. market, while also encouraging reciprocal investment flows between the two nations.
This adjustment in tariff policy marks a significant shift in the U.S.'s trade approach with South Korea, especially after years of fluctuating trade policies.
Lutnick emphasised that the trade deal, including the auto tariff reduction, reflects a commitment to creating favourable conditions for U.S. businesses and consumers while strengthening the economic partnership with South Korea.
The tariff reduction is expected to have a positive impact on U.S. consumers by providing more affordable South Korean-made vehicles. It also enhances the overall competitiveness of the U.S. automotive market, which is increasingly influenced by global trade dynamics.
The South Korean ruling party's legislation aims to make good on Seoul's agreement to invest $350 billion into strategic industries in the U.S., including shipbuilding.
"Korea’s commitment to American investment strengthens our economic partnership and domestic jobs and industry," Lutnick said, adding that he was "grateful for the deep trust between our two nations."
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