Korea and the United States reached a deal in last-minute negotiations one day before the Aug. 1 deadline.
The Korean trade negotiation delegation, headed by Deputy Prime Minister-Minister of Economy and Finance Koo Yoon-cheol, included Minister of Trade, Industry and Energy Kim Jung-kwan and Minster for Trade Yeo Han-koo.
In a meeting with a Korea trade negotiation delegation in Washington on July 30, U.S. President Donald Trump said the United States struck a deal in trade negotiations with Korea and Korea agreed to invest $350 billion, about 488 trillion won, in the United States.
Under the deal, the United States agreed with Korea to lower its threatened 25 percent reciprocal tariffs on Korean imports to 15 percent, as the former did for the EU and Japan.
Korea was able to reach the agreement in return for Seoul’s promise to invest $350 billion in the US and purchase $100 billion worth of American liquefied natural gas and other energy products.
Specifically, tariffs for Korean cars and auto parts decline from 25 percent to 15 percent and Korea was also given a most-favored nation treatment status for key sectors like semiconductors and pharmaceuticals, in which the United States is likely to impose higher tariffs.
In his later social network post, President Trump indicated a possible 100 percent tariff against imported semiconductors and an exemption in return for investments into the sector in the United States.
The deal appears to be a general framework and specifics remain unresolved.
During tariff negotiations with the United States, the Korean government proposed the “Make American Shipbuilding Great Again” (MASGA) project, calling for investing tens of trillion won for cooperation in the U.S. shipbuilding sector.
The proposal paid off as the United States showed a positive response, leading to the trade deal.
The news spurred stock price hikes in the shipbuilding industry. HD Hyundai Heavy Industries shares jumped to 486,000 won in intraday trading on July 28, hitting the year-highest-ever level.
As full Korea-U.S. trade negotiations began, Hanwha Ocean shares soared to 101,700 won, the highest-ever.
HJ Heavy Industries shared climbed to 9,120, approaching 9,900, the year’s highest level.
Minister of Trade, Industry and Energy Kim Jung-kwan said, “Our companies’ short-term export uncertainties have been resolved on the back of the striking of Korea-U.S. negotiations over tariffs, and we will ramp up cooperation in strategic industries, such as shipbuilding, automobiles, semiconductors and bio and make efforts to make the most of it as new U.S, market entry opportunities.”
MOTIE Minister Kim made the remarks while presiding over the Trade Strategy Roundtable. at the Korea Chamber of Commerce and Industry on Aug. 1 after he returned home from the United States, in which he wrapped up tariff trade negotiations.
As for the outcomes of the trade negotiations, Minister Kim evaluated that Korea secured competitive conditions, not unfavorable ones compared to major countries, and efforts to raise Korea’s market entry opportunities in the United States in strategic industries would be made.
“The $150 billion MASGA shipbuilding cooperation project and the remaining $200 billion investment packages in the United States are expected to ramp up Korea-U.S. cooperation in strategic industries, such as semiconductors, batteries and energy and pave the way for new market entries,” Minister Kim said.
He added that Korea will closely cooperate with the United States so that the investment packages could be conducive to the Korean economy and companies.
Earlier, Japan and EU promised to invest $550 billion and $600 billion in the United States in return for lowering the reciprocal tariffs from 25 percent and 30 percent to 15 percent, respectively.
The Ministry of Trade, Industry and Energy held a meeting of trade strategies toward the United States with major industry association and academic circles participating for the first time following the conclusion of Korea-U.S. trade negotiations.
They shared outcomes of the trade negotiations with industry representatives and discussed future response steps.
The meeting was attended by top officials from associations of major industries, including automobiles, semiconductors, batteries, shipbuilding, steel and bio, economic organizations, such as KCCI, Korea International Trade Association, Korea Economic Research Institute, Federation of Korean Industries, and Korea Federation of SMEs as well as Korea Institute for Economics & Trade and Korea Institute for International Economic Policy.
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