Trump lowers tariff threat in new South Korea deal

On Wednesday, President Trump announced he had reached a new trade agreement with South Korea that will place a 15% tariff on goods brought in from the country.

Trump posted on his social media platform Truth Social that the 15% levy is lower than the 25% tax he had threatened earlier this month. He added that American imports into South Korea would not face any duties and noted that South Korea would be “OPEN TO TRADE” and accept U.S. automobiles.

Earlier this month, he had warned that South Korean imports could face a 25% levy if no agreement was reached.

The move makes South Korea the latest major American trading partner to strike a deal before Trump’s Friday deadline, when he has warned he will levy steep duties on many nations. He has threatened to impose tariffs on dozens of countries if agreements are not secured by Friday. South Korea’s government has not yet issued an official statement to confirm the arrangement.

Last week, the president announced a pact with Japan, and on Sunday he said he had reached terms with the 27-nation European Union. Deals still remain unresolved with the United States’ three largest individual trading partners: Canada, Mexico and China.

Beyond the 15% tariff, Trump said South Korea agreed to hand over “$350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself.” He also said the country would purchase $100 million worth of liquefied natural gas or other energy products, and would “invest a large sum of money for their investment purposes.”

Trade between South Korea and U.S ran deep last year

The United States bought $131.5 billion in South Korean products, while South Korea imported $65.5 billion in goods from the United States. Those figures made South Korea America’s sixth-largest trading partner, not counting regional blocs like the European Union. These numbers come from Census Bureau data.

South Korea managed to dodge a technical recession thanks to a better-than-expected performance in the second quarter of 2025. The Bank of Korea’s preliminary report showed the economy grew by 0.6% on a seasonally adjusted basis in the three months ending in June, up from a 0.2% drop in the first quarter. That result marked a turnaround for the world’s fourth-largest economy.

Economists surveyed by Reuters had predicted growth of 0.5%, meaning the result slightly surpassed their forecasts. On a year-over-year basis, gross domestic product rose by 0.5%, compared to no growth in the first quarter when consensus estimates had been 0.4%.

The turn in the second quarter kept South Korea from slipping into a second recession, which is defined as two straight quarters of negative growth. Earlier, the Bank of Korea had warned that softer global demand and rising geopolitical risks could weigh on its performance, but the latest figures added more color to the economic picture.

While growth remains modest, many analysts expected South Korea to keep moving forward as strong exports, steady consumer spending and targeted government investment provide support. Experts said a mix of healthy export numbers and steady domestic demand could help the country weather global slowdowns. Final consumption expenditure rose by 0.7% in the April-to-June quarter, after falling 0.1% in the first quarter.

Private consumption climbed by 0.5%, helped by higher spending on motor vehicles and on entertainment and sports. Experts said this suggested that shoppers were feeling more confident, in part thanks to tame inflation and a relatively easy job market.

Exports of goods and services grew by 4.2% in that quarter, showing a clear rebound for a country tied into global supply chains and trade tensions. Semiconductors led the way, with petroleum and chemical products also making strong gains.

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