Gyeongju: South Korea's auto industry breathed a sigh of relief Wednesday after the United States agreed to lower tariffs on Korean vehicles, while the country's shipbuilding industry reaffirmed its status as a valuable card in Seoul's investment pledges.
According to Yonhap News Agency, following the summit between South Korean President Lee Jae Myung and his U.S. counterpart, Donald Trump, held in Gyeongju, the host city of this year's Asia-Pacific Economic Cooperation summit, South Korea announced that it has finalized an agreement with the U.S. on the details of Seoul's US$350 billion investment pledge, part of a broad tariff arrangement reached in July this year.
Kim Yong-beom, presidential chief of staff for policy, stated that the investment pledge will be two-pronged: $200 billion in cash installments and $150 billion allocated for shipbuilding industry cooperation, with an annual cap set at $20 billion.
As part of the deal, Washington agreed to lower tariffs on South Korean auto imports to 15 percent from 25 percent. Following the deal, Hyundai Motor Group welcomed the Seoul-Washington trade deal and vowed to continue efforts to strengthen its competitiveness. "We express our gratitude to the government for its dedicated efforts throughout the difficult negotiation process that led to this agreement," the group said in a statement.
"Hyundai Motor Co. and Kia Corp. will continue to pursue multifaceted measures to minimize the impact of tariffs while further strengthening our fundamentals through enhanced quality and brand competitiveness, technological innovation and other initiatives," it added. The tariff reduction will level the playing field for South Korean automakers in the U.S. market.
Previously, Washington had lowered its auto tariffs on imports from Japan and the European Union to 15 percent, while South Korean vehicles continued to face a 25 percent rate for months, weighing down on the price competitiveness of Korean cars.
The agreement on details for the $150 billion shipbuilding cooperation fund, agreeing to combine direct cash investment from South Korean firms with government-backed guarantees, appears to favor South Korea, granting its companies greater decision-making authority and flexibility over investment methods.
Earlier in the day, Trump said in a keynote address at the APEC CEO Summit that Washington will build a "thriving" shipbuilding industry together with South Korea. "We're serious partners. We're really, we're wedded. And we have a very special relationship, a special bond," he said, referring to South Korea.
In August, South Korea announced its plan to enhance its shipbuilding ties with the U.S. under an initiative dubbed "Make American Shipbuilding Great Again (MASGA)" as part of its tariff deal with Washington. "The MASGA fund previously agreed upon required our companies to invest directly in projects designated by the U.S., which created considerable pressure," the official said. "Under the new terms, our companies can now propose their own project plans, and the U.S. side will decide whether to approve them."