Trump announces deal to impose 15% tariff on South Korea

President Donald Trump says the US will charge a 15% tariff on imports from South Korea, in what he called a “full and complete trade deal”.

It comes just a day before a 1 August deadline for countries to reach agreements with the US or be hit with higher tariffs. South Korea had been facing a 25% levy if it had not struck a deal.

Pressure on Seoul had been mounting after Japan, a key competitor in the car and manufacturing industries, secured a 15% tariff rate with the US this week.

The deal, which will also see Seoul invest $350bn (£264.1bn) in the US, has been touted as a success in South Korea – especially given the record trade surplus of at least $56bn with the US last year.The 15% tariff rate will cover both cars and semiconductors, two of Seoul’s main exports to the US.

But steel and aluminium, other big earners for South Korea, will be taxed at 50%, in line with the global rate President Trump has set.

Nevertheless, South Korean leader Lee Jae Myung has praised the deal, saying it would put his country on an equal or better footing compared with other countries.

One victory for South Korea is that it did not need to cross key red lines it had set, chiefly that it would not further open up its rice and beef markets to US imports.

Seoul has strict controls over how much US rice and what types of beef can be imported, to protect its farming industry, and farmers were planning to protest if these rules were relaxed.

Of the $350bn South Korea has promised to invest in the US, $150bn will go into helping the US build ships, including warships.

This was central to South Korea’s strategy. It has a thriving shipbuilding industry, building more vessels than any other country in the world other than China, at a time when US shipbuilding and its navy is in decline.

By helping the US in this arena, it gets to address US security concerns, while bolstering its own industry.