US President Donald Trump and its Pres South Korea Lee Jae Myung finalized today Wednesday (29.10.2025) a commercial agreementconcluding months of negotiations to implement a framework agreement reached in July.
The deal calls for Seoul to invest $150 billion in shipbuilding, with an additional $200 billion earmarked for an investment pledge similar to a similar deal with Japan, South Korea’s policy chief Kim Yong-bum said today. This means that South Korea can use not only equity but also loans and loan guarantees to finance the investment package, which is a major concession.
Trump called his meetings with South Korea “excellent” and stated that they “almost finalized a trade deal” during a dinner hosted by Lee in his honor. “I think we have reached agreement on many very important issuesTrump said.
The won rose as much as 0.9 percent against the dollar after the deal was first reported. South Korea’s finance minister said last week that the won’s recent weakness reflected concern that the deal had not been finalized.
Both South Korea and the US had played down the idea that the two sides could finalize the deal, which would cap US tariffs on South Korean goods at 15 percent, during Trump’s visit.
US tariffs on Korean car imports remained at 25% while negotiations continued. That put the country’s carmakers at a disadvantage against their Japanese rivals as Tokyo finalized its deal in September. According to Kim, these tariffs will now be reduced to 15%.
Days before the deal was signed, Lee said the basics of a $350 billion investment package remained deadlocked, while Trump called the deal “almost ready,” underscoring the difference in perceptions even as negotiations neared their end.
The agreement will be valid until January 2029although the actual disbursement will be spread over the long term, Kim said. South Korea will also receive guarantees that its pharmaceutical exports will match the lowest tariff rate offered to any US trading partner, Kim said.
Kim stated that, under the agreement, investment in the US will be limited to $20 billion per year. Earlier this month, the Bank of Korea had set that amount as the maximum that could be allocated in dollars without having a negative impact on the local currency market.
US also allows guarantee of $150 billion of Korean shipbuilding investment by domestic and international commercial banksthereby reducing the burden on the foreign exchange market. Profits will be shared 50-50 between the two countries until principal and interest are repaid.
The two sides they also agreed to implement tariff levels for semiconductors which are not disadvantageous compared to those applied in Taiwan, the main competitor of Korean companies.
Kim said the government incorporated multiple safeguards into the investment package to limit financial risk and protect the foreign exchange market. Only “commercially viable projects with guaranteed cash flow” would be pursued, he said, noting that this clause would be explicitly mentioned in the memorandum of understanding.
He added that the two sides agreed to adjust profit-sharing terms if Korea is unable to recoup its capital within 20 years, allowing flexibility in repayment. The deal also caps annual disbursements at $20 billion and uses an umbrella special-purpose company structure so that losses on one project can be offset by profits on another.