South Korea announces reduction of some tariffs as part of new US trade deal

The United States and South Korea have reached a comprehensive trade agreement, both countries said after talks between their leaders.

South Korean presidential adviser Kim Yong-beom said the two sides had agreed to keep each other’s tariffs at 15%, but taxes on cars and auto parts would be reduced.

South Korea will also invest $350 billion in the United States, including $200 billion in cash investments and $150 billion in shipbuilding, Kim said.

US President Donald Trump, who is currently on a week-long trip to Asia, said at a dinner following the nearly two-hour talks that the deal was “virtually done.” He did not give any further details.

A trade deal was announced in late July under which South Korea would avoid the worst of tariffs by pumping $350 billion (£264 billion) in new investment into America. But talks about the structure of these investments have stalled.

Both countries have been important allies in the past – but tensions came to a head after hundreds of South Koreans were arrested in an immigration raid in the US last month.

Trump’s next meeting with his Chinese counterpart Xi Jinping will take place on Thursday on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit being held in Gyeongju.

China’s Foreign Ministry has confirmed the meeting, which will take place on Thursday in the city of Busan, just a short flight from Gyeongju.

This will be the first face-to-face meeting between the two leaders since Trump took office in 2025 and imposed tariffs on every country in the world.

Trump told a group of CEOs in Gyeongju on Wednesday that he believes the U.S. will “make a deal” with China and that it will be “a good deal for both.”

He also praised APEC countries for making the global trading system, which he said was “broken” and “in dire need of reform,” fairer.

“Economic security is national security,” Trump says. “This applies to South Korea, this applies to every country.”

Before talks with President Lee on Wednesday, Trump was greeted by an honor guard and gifts including a gold crown.

“I would like to wear it now,” Trump said of the crown.

He also received the Grand Order of Mugunghwa, South Korea’s highest honor.

He is the first US president to receive the award, which was given “in recognition of his contribution to peace on the Korean Peninsula,” the South Korean presidential office said.

Both heads of state and government attended a working lunch, which was followed by a private meeting in the afternoon, but no concrete agreement appeared to be reached.

Both sides had previously downplayed the prospect of a breakthrough in the talks – a fact that will disappoint many in South Korea’s electronics, chip and auto industries who had been hoping for some clarity amid the tariff chaos.

Trump had imposed a 25% tariff on Seoul earlier this year, which Lee was able to negotiate down to 15% after Seoul announced it would invest $350 billion in the U.S. and buy $100 billion worth of liquefied natural gas.

But the White House later increased its demands as part of trade talks, with Trump pushing for cash investments in the US.

Trump’s arrival in South Korea was preceded by North Korea’s test launches of surface-to-air cruise missiles.

The US president had expressed interest in meeting with North Korean leader Kim Jong Un, but indicated on Wednesday that his team had been unable to arrange this during his trip.

Trump pointed to long-standing tensions between North and South Korea and said: “We’ll see what we can do to make this all right.”

And ahead of the summit where both leaders met, a small anti-Trump group of protesters gathered on Wednesday afternoon, some of whom shouted anti-Trump slogans. Police could be seen violently dispersing the crowd and arresting some people.

However, hundreds more attended a pro-Trump rally – including those shouting anti-China rhetoric – also held near the summit.

Anti-Chinese sentiment has also grown steadily in South Korea in recent years. Chinese interference has become a common theme in conspiracy theories about former South Korean President Yoon Suk Yeol.

During his trip to Japan on Tuesday, the US President visited signed an agreement on rare earth minerals with Tokyo and a document heralding a new “golden age” of U.S.-Japan relations. This reaffirmed the two countries’ commitment to implement previous agreements, including the 15% tariff agreement negotiated earlier this year.

He previously attended a meeting of Southeast Asian leaders, known as Asean, in Malaysia. There he is led a “peace agreement” between Thailand and Cambodia, whose long-standing border dispute erupted into open conflict in July.

With additional reporting from Laura Bicker, China correspondent, and Suranjana Tewari, Asia business correspondent