Disparities, lack of details blight Korea's not-so-done trade deal with U.S.

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Disparities, lack of details blight Korea's not-so-done trade deal with U.S.

Published: 03 Aug. 2025, 17:59 Updated: 04 Aug. 2025, 09:41

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

U.S. President Donald Trump poses for a commemorative photo with the Korean delegation at the White House on July 30. From left: Choi Ji-young, director general for international economic affairs at Korea’s Ministry of Economy and Finance; U.S. Secretary of Commerce Howard Lutnick; Korea’s Trade Minister Yeo Han-koo; Industry Minister Kim Jung-kwan; President Donald Trump; Deputy Prime Minister and Finance Minister Koo Yoon-cheol; U.S. Trade Representative Jamison Greer; U.S. Treasury Secretary Scott Bessent; Park Jeong-seong, head of the trade and investment bureau; and U.S. Secretary of State Marco Rubio. [WHITE HOUSE]

A couple of sticking points loom following Washington’s decision to cap Korea’s tariffs at 15 percent: The details of $450 billion investment package that would trickle into the U.S. economy and disparities between the two countries on agricultural trade as well as lingering uncertainties on digital regulations and tariffs on pharmaceuticals and semiconductors.

Korea’s trade delegation was lauded by the government for drastically lowering the U.S. tariff rate from 25 to 15 percent. The negotiation process was far from smooth, according to Deputy Prime Minister and Finance Minister Koo Yun-cheol.

“It felt like a war,” Koo said to the press upon arriving at Incheon International Airport on Friday. “They say the devil is in the details, but I believe the angel is too... We plan to use the newly established agreement as a basis to create concrete strategies and actively respond during detailed negotiations with the United States.”

Kim Jung-kwan, minister of trade, industry and energy, evaluated the outcome as having “averted the worst-case scenario.”

The dialogue was described as intense, with Kim adding, “While speaking with U.S. Commerce Secretary Howard Lutnick, whenever we said something unfavorable to him, he would stand up and say that we should just go with the 25 percent tariff, and we had to hold him back.”

$450 billion into the U.S. economy
Out of the $450 billion, $100 billion will go toward Korea’s purchase of U.S. energy by 2028. The remaining $350 billion investment was labeled “the centerpiece of the deal,” according to White House press secretary Karoline Leavitt, with 90 percent of the profits going to the U.S. government to pay off its national debt and fund presidential initiatives.

The claim clashes with Trade Minister Kim’s explanation that the investment would be “reinvestment-based.”

White House press secretary Karoline Leavitt speaks during a press briefing at the White House in Washington, Thursday, on July 31. [AP/YONHAP]

$150 billion out of $350 billion will be spent on the “Make America Shipbuilding Great Again” initiative, although the question remains how this capital will be allocated. The sum is more than double the combined 87.5 trillion won ($63 billion) market valuation of Korea’s three major shipbuilders, HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries. Therefore, a large chunk of the fund is expected to come from loans and guarantees provided by state-run financial institutions such as the Export-Import Bank of Korea and the Korea Trade Insurance Corporation.

Korean shipbuilders might be open to the possibility of acquiring more U.S. shipyards. Hanwha Ocean acquired Philly Shipyard last year and also holds a 9.9 percent stake in Austal, an Australian naval defense firm with shipyards in Alabama and California. Another major shipbuilder, HD Hyundai Heavy Industries, has yet to make a purchase, but the company has said before that it is “reviewing different methods, including acquiring a shipyard through direct investment.”

Details on the remaining $200 billion remain unclear, including how it will be structured, where it will be used and how returns will be distributed.

The White House posted a photo on its official Instagram account showing President Trump signing the Korea–U.S. trade agreement at the White House. [WHITE HOUSE]

Drawing the line at rice
Views are diverging between Washington and Seoul over agricultural trade. While Leavitt remarked that Korea will provide “historic market access to American goods like autos and rice,” multiple high-level officials in Korea have firmly denied the assertion.

Agricultural products such as rice and beef have been treated as nonnegotiable red lines in the tariff talks, given the implications for national food security and rural livelihoods.

“There was no discussion of rice at all,” Koo said on Friday, dismissing speculation.

Song Mi-ryeong, minister of agriculture, food and rural affairs, stated on Friday that there would be no further market opening for rice and beef.

“Under the Korea-U.S. FTA, 99.7 percent of our agricultural market is already open, essentially complete liberalization,” Song said. She also noted that Korea already imports 132,000 tons of U.S. rice annually under a low tariff, emphasizing that the rice market is already accessible.

Presidential Policy Chief Kim Yong-beom reinforced the message during a Sunday appearance on KBS radio, stating unequivocally, “There will be no additional market opening for rice or beef, that’s a clear fact.”

He added that while technical discussions — such as simplifying quarantine procedures — may take place, producers "will not be asked to pay more for products like rice or beef.”

Asked whether additional agricultural concessions could be requested at a future Korea-U.S. summit, Kim responded, “All trade-related matters were concluded in this round of negotiations.”

Deputy Prime Minister for Economic Affairs Koo Yoon-cheol answers questions from reporters upon his return to Korea at the Incheon International Airport on Aug. 1, after concluding trade negotiations with the United States. [YONHAP]

Lingering uncertainties
Nontariff issues remain unresolved, particularly concerning Korea’s digital regulations on foreign companies. Two key areas drawing close attention from U.S. policymakers are Korea’s proposed online platform laws, which are being advanced by the Fair Trade Commission. These bills would classify large platform operators — such as Google and Apple — as market-dominant entities, placing most U.S. Big Tech firms under stringent regulations. The parliament-controlling Democratic Party is expected to hold a policy meeting with the watchdog soon to further discuss the matter.

Meanwhile, a decision on whether to allow Google to export high-precision domestic map data has been deferred. The government had originally aimed to settle the issue during a ministerial meeting on Aug. 11 but has now delayed the decision until after the upcoming Korea–U.S. summit.

On the subject of remaining tariffs on semiconductors and pharmaceuticals, Koo confirmed in a phone interview with Korean media outlet MBN on Sunday that the delegation secured a commitment on most-favored-nation treatment.

“If item-specific tariffs are imposed, we expect rates to align with those applied to Japan and the European Union,” he said. Koo also noted that defense cost-sharing was not addressed during the negotiations.

BY LEE JAE-LIM [[email protected]]