SEOUL, Nov. 14– South Korea and the United States on Friday finalized their tariff and security agreement by announcing a joint fact sheet on summit talks between South Korean President Lee Jae-myung and U.S. President Donald Trump on Oct. 29.
The agreement included 150 billion U.S. dollars of South Korean investment in the shipbuilding sector approved by the United States and 200 billion dollars of additional South Korean investment, according to a memorandum of understanding about strategic investments, in exchange for lower U.S. tariffs.
The U.S. will apply a reciprocal tariff rate of 15 percent on originating goods of South Korea, reduce sectoral tariffs on automobiles, auto parts, timber, lumber and wood derivatives of South Korea to 15 percent, and apply no greater than 15 percent to pharmaceuticals of South Korea.
The United States also intended to remove supplemental tariffs imposed on products on the list of the Potential Tariff Adjustments for Aligned Partners, including generic pharmaceuticals, generic pharmaceutical ingredients and natural resources unavailable in the United States, as well as certain aircraft and parts of South Korea.
South Korea’s Yonhap News Agency noted that the fact sheet did not specify when the United States will lower the current 25 percent tariff on automobiles and auto parts to 15 percent.
Industry experts in South Korea believe that even with the tariff agreement, the burden on the country’s companies in the affected sectors will not ease immediately.
Citing a source in the Korean auto industry, the EToday news website reported that it will take at least one to two months for the effects of the tariff reduction to be felt, meaning that companies will continue to face significant short-term liquidity pressure.
Yonhap’s analysis pointed out that Korean automobile exports to the United States had previously enjoyed zero tariffs, and determining how to cope with the impact of U.S. tariffs on South Korea’s automotive industry will be a new challenge.
Kim Pill-soo, a professor at Daelim University College, stressed that fundamentally, the U.S. tariff issue has not disappeared.
Regarding the so-called modernized alliance, the U.S. reaffirmed its pledge to provide extended deterrence, while South Korea shared its plan to increase its defense spending to 3.5 percent of its gross domestic product as soon as possible.
South Korea also shared its plan to provide comprehensive support for the U.S. Forces Korea amounting to 33 billion dollars in accordance with Seoul’s legal requirements while committing to spending 25 billion dollars on U.S. military equipment purchases by 2030.
The United States gave approval for South Korea to build nuclear-powered attack submarines. (Xinhua)
