The South Korean government said on Wednesday that it had reached a trade agreement with the U.S. that would reduce tariffs and set up a $350 billion investment fund following bumpy, months-long negotiations.
Trump backed down from an earlier demand for South Korea’s $350 billion investment to be paid up front — in cash
US President Donald Trump (L) and South Korea's President Lee Jae Myung take their position for a family photo with other leaders in South Korea. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
The South Korean government said on Wednesday that it had reached a trade agreement with the U.S. that would reduce tariffs and set up a $350 billion investment fund following bumpy, months-long negotiations.
The accord was announced during President Donald Trump's visit to South Korea as part of a regional economic summit with Southeast Asian nations. Trump had earlier signaled he was closing in on a final agreement with South Korean president Lee Jae Myung.
“I think the meeting was determined, very much determined,” Trump said. “We made a deal, pretty much finalized a trade deal.”
The White House did not immediately respond to a request for comment and further details.
South Korea and the U.S. reached a preliminary agreement in July, two months before Trump proceeded to impose double-digit tariffs on most foreign governments. That earlier deal contained 15% tariffs on South Korean exports to the U.S., including its U.S.-bound autos. A 25% tariff for South Korea then kicked in, since no final deal had been agreed to by Trump's self-imposed deadline.
U.S. trade with South Korea totaled $240 billion in 2024, per data from the Office of the Trade Representative. The nation's exports to the U.S. are largely made up of vehicles and machinery. South Korean firms with large U.S. footprints include Hyundai and Samsung.
The planned $350 billion investment fund will be divided into two parts, according to CNN. About $200 billion will be done as a cash investments spread over many years with a $20 billion yearly limit. The remaining $150 billion is to be set aside for U.S. shipbuilding carried out by South Korean firms.
Trump originally wanted the entire sum as cash paid up-front, which unnerved South Korean officials who didn't want to exhaust their foreign currency reserves.
A day earlier, Trump announced that Japanese auto giant Toyota $TM would invest $10 billion in U.S. car plants. Tokyo published details on Tuesday of projects under consideration for its planned $550 billion investment fund. "Go out and buy a Toyota," Trump said.
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