United States and South Korea leaders announce major trade and security agreement that includes tariff cuts and cooperation on nuclear-powered submarines [Image by Global Minnesota]
(The Post News) – The United States and South Korea rolled out a landmark trade and security agreement Friday. This agreement remakes the two allies’ economic and military relationship. The deal was concluded after an October meeting between U.S. President Donald Trump and South Korean President Lee Jae Myung. During this meeting, both leaders agreed upon aggressive tariff cuts by the U.S. They also agreed on deeper cooperation on critical technologies.
$350 Billion Korean Investment and Major Tariff Cuts
South Korea pledged $350 billion of new investment in the United States. This includes $150 billion in shipbuilding. It also includes $200 billion in advanced industrial sectors. In exchange, the U.S. reduced tariffs on Korean autos and other key exports. The tariffs decreased from 25 percent to 15 percent. This change eased the pressure on South Korea’s manufacturing behemoths.
The administration in Seoul said it would send no more than $20 billion per year. This measure is to keep the won stable. They added that the U.S. agreed to consider timing adjustments if the market volatility increases.
President Lee hailed the end of negotiations, saying the pact bolsters both countries’ economic and security fundamentals. “Good competition requires excellent partners,” he said. “This agreement proves that.”
In a historic shift, the U.S. approved South Korea’s plan to build nuclear-powered attack submarines and promised to help them get nuclear fuel. Yonhap reports that Seoul wants to field at least four 5,000-ton nuclear-powered submarines by the mid-2030s. This will be a game-changing upgrade for the South Korean Navy.
President Trump previously stated that construction would occur at the Philadelphia Shipyards. However, South Korean national security adviser Wi Sung-lac issued a statement. He indicated the submarines will be built in South Korea. This statement ended weeks of speculation.
The agreement expands joint work in shipbuilding, AI, semiconductors, and nuclear technology-areas both countries consider key to strategic competition. A new shipbuilding working group will promote the production of U.S. commercial and military vessels.
Kim Jung-kwan, South Korea’s industry minister, and the U.S. secretary of commerce, Howard Lutnick, also signed a 27-point MOU outlining project timelines. Specific initiatives are to be selected by the U.S. president after consultations with Seoul.
A nuclear-powered submarine program in South Korea promises to enhance its defence industry. It will also shift the regional balance of power. China warned that the arrangement risks undermining the global nonproliferation regime. North Korea, though so far silent, is expected to similarly condemn the move.
A Political Economic Win for Seoul
Coming into office amid political tumult, the president was eyeing a big early diplomatic win. He had turned a tariff fight into a strategic partnership. This partnership yielded economic relief. It also expanded defence capability.
Analysts are divided on whether Seoul gained more in the deal than either Europe or Japan. Some consider the nuclear-related commitments as greater long-term costs for Seoul. Others see them as vital to competing in the Indo-Pacific.
As the two countries embark on implementing the agreement, they will make massive investments. Nuclear-powered submarines will shape the region’s future for years to come.
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