Korea and the United States have reached an agreement in trade tariff negotiations.The Korean government announced the details of the agreement following a summit between President Lee Jae-myung and President Donald Trump at the Gyeongju National Museum in North Gyeongsang Province on the 29th (Korean time).

Under the deal, Korea agreed to make $200 billion in cash investments out of a total $350 billion commitment to the U.S., with an annual cap of $20 billion. The mutual tariff rate will remain at 15%, as agreed in July, and safeguards such as explicitly stating the "commercial viability" of U.S. investments in the document have been secured. In a briefing, Presidential Chief of Staff for Policy Kim Yong-beom stated, "The $350 billion in financial investments to the U.S. consists of $200 billion in cash investments and $150 billion in shipbuilding cooperation. This structure is similar to Japan's $550 billion financial package with the U.S., but we have set an annual investment ceiling of $20 billion.

"He continued, "By investing within the $20 billion annual limit based on project progress, it stays within the range our foreign exchange market can handle, minimizing its impact on the market. There will be no shock to Korea's forex market." He added, "We have also established grounds to request adjustments to payment timing and amounts if concerns about forex market instability arise.

"The $150 billion shipbuilding cooperation, dubbed the "Mars Project," will be led by Korean companies and includes guarantees beyond mere investments. Kim noted that multi-layered safeguards have been established to enhance the likelihood of principal recovery. "We agreed to pursue only projects with commercial viability and to specify this in the memorandum of understanding (MOU). We are reviewing mechanisms through an investment committee and advisory board to filter out unworthy projects.

" Additionally, the two countries agreed to split profits 50-50 until principal and interest are repaid, and to adjust the profit-sharing ratio if full repayment isn't achieved within 20 years. However, the U.S. side has pushed for a 90-10 profit split (90% to the U.S., 10% to Korea) after principal recovery, and it is understood that the U.S. position is likely to prevail on this point.Kim also explained, "We designed a special purpose company (SPC) structure in an 'umbrella' format, allowing losses from one project to be offset by gains from others, significantly reducing risk."Kim asserted that these safeguards represent a substantial increase compared to the already concluded U.S.-Japan tariff agreement.

As a result of this agreement, U.S. tariffs on Korean automobiles will be reduced from 25% to 15%. Mutual tariffs have already been applied at 15% since the late July agreement. Certain item-specific tariffs, such as those on pharmaceuticals and wood products, will receive most-favored-nation treatment, while aircraft parts, generic drugs, and natural resources not produced in the U.S. will be tariff-free. For semiconductors, tariffs will be applied at a level not disadvantageous compared to major competitor Taiwan. In agriculture, including rice and beef, the agreement prevents further openings and strengthens communication on quarantine procedures, finding common ground at that level.