The U.S. has hammered out key details of a trade agreement with South Korea that was announced over the summer, but had been on shaky ground due to investment stipulations from President Donald Trump.
Trump announced Wednesday the two countries had “made our deal, pretty much finalized it,” during a dinner with South Korean President Lee Jae Myung on his trip to Asia.
“We did. We reached a deal, and we did a lot of different things. We had a great session,” Trump added in comments to reporters ahead of the dinner.
Kim Yong-beom, South Korea’s top presidential policy chief, confirmed the statement, telling the press that there had been “dramatic progress” in negotiations.
The latest developments come after U.S. and South Korea negotiators have worked for months to fine-tune a verbal trade agreement the two countries reached in July, designed to relax tariffs Trump had placed on Seoul.
Details about a $350 billion sum Trump wanted Seoul to invest in the U.S. economy had stalled progress in talks. However, those details have now been hashed out, according to Yong-beom.
South Korea will invest $200 billion in the U.S., capped at $20 billion a year, and also join in a shipbuilding partnership valued at $150 billion, Yong-beom told reporters in Gyeongju, following the bilateral meeting between Myung and Trump. Mutual tariffs will remain at 15%, and U.S. tariffs on South Korea’s cars and auto parts will drop from 25% to 15%.
“Prospects were not bright even last night, and there was dramatic progress on the day,” Myung’s presidential chief of staff for policy said.
The new framework addresses concerns South Korea held about meeting the Trump administration’s original demands for a more direct $350 investment in the U.S.
“If we were to withdraw $350 billion in the manner that the U.S. is demanding and to invest this all in cash in the U.S., South Korea would face a situation as it had in the 1997 financial crisis,” Myung told Reuters in September, referring to the economic crisis his country experienced nearly three decades ago.
Details Yong-beom spelled out on Wednesday signaled the two parties have reached a compromise for a more gradual investment, as Seoul is set to split its promised $350 billion investment fund into $200 billion in cash to be paid in installments, with the other $150 billion to be spent on shipbuilding investments.
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The trade agreement comes as the latest update in Trump’s Asia tour, after he made stops in Malaysia and Japan. A meeting with Chinese President Xi Jinping marks his next major event. Trump has expressed hope he can reach a trade deal with Beijing as well during the upcoming encounter.
“I think it’ll be a good deal for both,” he said this week. “That’s better than fighting and going through all sorts of problems.”
