2025-12-03
US Cuts Tariffs on South Korea
The United States recently confirmed it will lower tariffs on South Korean imports from 25 percent to 15 percent, retroactive to November 1, 2025. This move significantly reduces the burden on major Korean export items such as automobiles and aircraft components. Overall industry costs are expected to decline by about 10 percent compared with the previous month, while easing the market uncertainty caused by the earlier high tariffs. Automakers like Hyundai and Kia are expected to benefit the most, potentially saving billions of dollars in tariff payments starting in November and setting a new record low tariff level since the bilateral trade agreement took effect.
On South Korea’s side, the National Assembly passed a bill on November 26 to fulfill its 350 billion dollar strategic investment commitment to the United States, meeting the requirements outlined in the U.S. memorandum and prompting the U.S. Department of Commerce to finalize the tariff reduction. This investment framework originated from the summit between South Korean President Lee Jae Myung and U.S. President Trump on October 29, where the two sides reached an “investment-for-tariffs” agreement, including 200 billion dollars in cash investments and a 150 billion dollar shipbuilding cooperation project.
The Trump administration is promoting this approach to strengthen U.S. industrial interests, while South Korea is moving quickly through legislation to prevent its electronics and automotive sectors from continuing to face a 25 percent tariff burden. In the short term, the tariff reduction is expected to support growth in Korean exports to the U.S., with automobile sales in the first quarter of 2026 projected to rise more than 5 percent year over year, helping revive the supply chain. In the midterm, the U.S.–Korea trade framework may expand to more product categories. South Korea will need to continue meeting its investment commitments to maintain the reciprocal 15 percent tariff rate, the same level granted to Japan and the European Union, and reduce risks in future negotiations. While the overall market outlook is generally positive, global trade conditions remain uncertain under Trump’s policies. South Korean companies will need to strengthen domestic production strategies to better withstand volatility.