President Donald Trump announced a new trade deal with South Korea, which calls for 15% tariffs on goods from there.
“The Deal is that South Korea will give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself, as President,” he said in a Truth Social post on Wednesday.
Goods from South Korea briefly faced a 25% “reciprocal” tariff in April before Trump paused levies impacting dozens of nations. The pause was set to expire on Friday.
The new tariff of 15%, however, is still higher than the 10% minimum tariff South Korea and dozens of other nations’ goods have been charged since April.
Even at current levels, Trump’s tariffs have been taking a toll on South Korea’s economy, with gross domestic product for the first quarter of this year unexpectedly contracting by an annual rate of 0.1%, the first negative reading in four years. A 25% tariff would have made the economic pain even more acute.
It’s a dilemma facing each of America’s trading partners: Give in to Trump’s demands to get off his August 1 “worst offenders” tariff list or stand your ground and face potentially crippling import duties.
The general understanding for months has been that tariffs won’t go back to where they were before Trump’s second term. But now heads of state are grappling with the fact that they probably won’t go back to current levels either come Friday.
For example, Trump increased tariffs on Brazilian goods by 40 percentage points to 50% on Wednesday after its president, Luiz Inácio Lula da Silva, refused Trump’s demands to end its trial against right-wing former president Jair Bolsonaro.
Goods from the European Union and Japan, with which Trump announced recent trade agreements, also will face 15% tariffs on Friday. Those agreements included relief from sectoral tariffs in place or threatened, including on autos and pharmaceuticals.
Like Japan, cars from South Korea shipped to the US will face lower tariffs of 15%, Commerce Secretary Howard Lutnick said in a Wednesday post on X. “They will also not be treated any worse than any other country on semiconductors and pharmaceuticals. Steel, aluminum, and copper are not included and remain unchanged,” he added.
South Korea is the United States’ seventh-greatest source of imports. Last year it shipped $132 billion worth of goods to the US, according to Commerce Department data. In addition to cars and car parts, semiconductors and electronics were among the top goods Americans bought from there.
Meanwhile, the US exported $66 billion worth of goods to South Korea last year. Oil and gas, as well as industrial machinery, were the top two exports.
The United States and South Korea have had numerous free trade agreements over the past two decades, which have been renegotiated on several occasions, including during the first Trump administration.
This story has been updated with additional context and developments.
For more CNN news and newsletters create an account at CNN.com
