South Korea and the United States have just signed a major deal to boost trade and investment between the two countries. The agreement – a memorandum of understanding, or MoU – details how Seoul will ship out 350 billion dollars in investment in return for lower U.S. tariffs on Korean goods.
The MoU was signed electronically by South Korea’s Industry Minister Kim Jung‑kwan and U.S. Commerce Secretary Howard Lutnick on Friday. The two sides finished the terms on October 29, and the deal now moves forward.
How the Investment Breaks Down
Under the final plan, South Korea will provide:
- $200 billion in cash paid in installments of up to $20 billion a year.
- $150 billion for joint shipbuilding projects.
These funds will be used to support “commercially reasonable” projects that were highlighted in a joint fact sheet released earlier that day. The focus areas include advanced technology industries such as energy, semiconductors, pharmaceuticals, critical minerals, artificial intelligence and quantum computing.
Lowering U.S. Tariffs
The agreement also revises U.S. tariffs on Korean products. As of August 7, reciprocal tariffs on many goods were cut from 25 percent to 15 percent, and the U.S. plans to lower tariffs on Korean cars, lumber, pharmaceuticals and other items to the same 15 percent level. Semiconductor tariffs will match the rates for competitors like Taiwan.
Project Selection and Management
To manage the joint investment, each side will lead its own committee: South Korea’s Industry Minister will head a Consultation Committee, while the U.S. Commerce Secretary will lead an Investment Committee. These groups will oversee a special purpose vehicle (SPV) created by the U.S. to manage the projects, with smaller SPVs for individual projects.
South Korea will receive priority as a vendor or supplier for U.S. projects, and when the U.S. presents a project, Korea will review it and, if it moves forward, will fund the project within 45 business days.
Profit Splits
Initially, profits from the joint projects will be split evenly, 50‑50. Once each side has received an amount equal to their initial investment, profits will then shift to a 90‑10 split in favor of the United States.
The MoU aims to foster closer economic ties and help both countries expand in key advanced industries before President Trump’s term ends in January 2029. The deal marks a significant step toward greater trade cooperation and technology collaboration between the two nations.
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