In a significant diplomatic development, President Donald Trump announced on Wednesday that he and South Korean President Lee Jae-myung have nearly finalized a bilateral trade agreement. This announcement came during a dinner with President Lee and other key leaders on the fringes of the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, South Korea.
During the dinner, Trump shared with reporters, “We made our deal, pretty much finalized it,” signaling that the two nations are on the verge of sealing the agreement. He further elaborated, “We discussed some other things to do with national security et cetera. And I think we came to a conclusion on a lot of very important items,” underscoring the breadth of their discussions beyond mere trade.
Upon Trump’s arrival in Gyeongju, President Lee set a harmonious tone by bestowing upon him South Korea’s highest honor, the Grand Order of Mugunghwa. This marked a historic moment as Trump became the first American president to receive this distinguished award.
The cordial atmosphere was further highlighted when Lee presented Trump with a replica of a ceremonial crown. This gesture, rich in symbolism, was likely to be appreciated by Trump, especially given the ongoing “No Kings” protest movement in the U.S., which has struggled to gain traction among his critics. The crown, emblematic of royal authority, added a layer of irony to the political dynamics back home.
In a moment that seemed to capture the essence of Trump’s unique relationship with the media, he quipped, “I’d like to wear it right now,” when accepting the crown. This comment was met with predictable consternation from left-leaning media outlets like the New York Times, which expressed their discontent in editorials.
“I’d like to wear it right now,” Trump said when he accepted the crown, causing left-wing media like the New York Times to gasp in helpless editorial despair.
Having done everything possible to put Donald Trump in a good mood, Lee sat down to bilateral negotiations with the American president that apparently went quite well.
The broad outlines of the agreement were drawn up in July. One of the biggest commitments offered by South Korea was a pledge to invest $350 billion in the United States. Trump and Lee reportedly agreed that South Korea can structure these investments in two funds – a $200 billion general investment account to be funded in $20 billion annual installments, plus a more urgent $150 billion fund devoted to investments in American shipbuilding.
Trump has emphasized the importance of restarting the American shipbuilding industry, which dwindled away to producing only a few ships per year under intense anticompetitive pressure from China. Beijing slapped punitive sanctions on five subsidiaries of South Korean shipbuilding company Hanwha Ocean in mid-October to punish the company for investing in American ports.
Kim Yong-beom, an aide to President Lee, said on Wednesday that the U.S. and South Korea will reduce their reciprocal tariff rates from 25 percent to 15 percent under the deal. South Korea was especially keen to lower the U.S. tariff rate on its automobiles, which were being levied at a higher rate than competitors in Japan and Europe.
South Korea’s Yonhap News reported that pharmaceuticals and lumber will also be given “most-favored nation” status, while airplane parts and natural resources that cannot be produced in the United States will be exempt from tariffs, and South Korean semiconductors will face the same levies as those from Taiwan.
“Through this agreement, we expect to improve conditions for Korean companies entering the U.S. market and secure a more favorable export environment than other nations. We also anticipate that clarifying the specific scope and timing of tariff reductions will significantly reduce market uncertainty,” Kim said.
South Korean investors and corporations are very eager to reduce market uncertainty, while Trump and Lee both sought to lower expectations for a grand trade deal announcement this week. Kim echoed Trump’s remark that the terms of the deal are “nearly finalized,” and a detailed fact sheet should be released within a few days.
According to Kim, the final version of the trade deal will include mechanisms that prevent either side from making dramatic changes. The deal will be based on the principle of “commercial rationality,” which essentially means neither side will expect companies from the other country to make unreasonably expensive or risky investments.
