US and South Korea Announce Economic Security Agreement: Involves Massive Investment, Tariff Reduction, and Defense Expansion

On November 14th, the United States and South Korea made an announcement regarding a comprehensive economic and security agreement. This agreement details South Korea's multi-billion-dollar investment plan and significant tariff reductions by the United States. It also outlines expanded defense cooperation. According to the White House, Washington has given its approval for South Korea's $150 billion investment in the U.S. shipbuilding industry. Additionally, under a new Memorandum of Understanding, South Korea has committed to a total of $200 billion in "strategic investments." In a major military development, the United States has authorized South Korea to build nuclear-powered attack submarines. South Korea has pledged to purchase $25 billion in U.S. military equipment by 2030 and has announced plans to "quickly" increase its defense spending to 3.5% of GDP. South Korea has also committed to providing comprehensive support amounting to $33 billion to the U.S. troops stationed in Korea within the framework of its domestic laws. On the trade front, the United States will reduce the 232 tariffs on South Korean automobiles, auto parts, lumber, and wood products to 15%, and it plans to impose no more than a 15% 232 tariff on drugs from South Korea. Meanwhile, South Korea has committed to lifting the import quantity restriction of 50,000 unmodified U.S. vehicles and has agreed to cooperate with the U.S. to address non-tariff barriers that affect food and agricultural trade. (FXStreet)