SEOUL, South Korea — South Korea and the United States have formally signed a memorandum of understanding (MoU) outlining Seoul’s $350 billion investment pledge in exchange for reduced U.S. tariffs, the Ministry of Trade, Industry and Resources announced Friday.
The agreement was signed electronically by South Korean Industry Minister Kim Jung-kwan and U.S. Commerce Secretary Howard Lutnick. It follows an October 29 accord in which both sides finalized the structure of the investment package, which was negotiated as part of a broader trade deal, according to Yonhap News Agency.
Under the terms, South Korea will provide $200 billion in cash installments — capped at $20 billion per year — along with an additional $150 billion earmarked for bilateral cooperation in shipbuilding. In return, the United States has lowered reciprocal tariffs on South Korean goods to 15 percent from 25 percent as of August 7. Tariffs on Korean automobiles and lumber will also be reduced to 15 percent.
South Korean pharmaceutical products will face tariffs no higher than 15 percent, while semiconductor tariffs will be “no less favorable” than those applied to competitors such as Taiwan.
Minister Kim said the two countries will identify and approve projects funded by the $200 billion component before President Donald Trump’s current term ends in January 2029. The investments will target “commercially reasonable” projects in advanced sectors, including semiconductors, clean energy, critical minerals, pharmaceuticals, artificial intelligence, and quantum computing.
The MoU establishes a two-tier oversight structure: a Consultation Committee led by South Korea’s industry minister and an Investment Committee chaired by the U.S. commerce secretary. The United States will create a special purpose vehicle (SPV) to manage the joint projects, with additional SPVs formed for individual initiatives. These project-level SPVs may be assigned Korean project managers whenever possible.
The agreement also specifies that the United States must prioritize South Korean firms when selecting vendors or suppliers for projects under the investment package.
According to the MoU, the U.S. will periodically propose investment opportunities, and South Korea must commit funding within 45 business days if it chooses to participate.
On profit sharing, both nations will split revenues from joint projects 50-50 until each side receives an amount equal to its allocated share. Afterward, profits will be distributed 90 percent to the United States and 10 percent to South Korea. (Source: IANS)
