South Korea is exploring a substantial investment in the United States as part of its trade negotiations with the Trump administration, according to a Bloomberg report. The discussions, which include topics such as tariffs, follow a similar path to Japan's recent trade agreement with the US, which involved a massive financial commitment in exchange for lower tariffs.
The US-Japan trade agreement saw Japan pledge $550 billion in investments to reduce tariffs from 25% to 15%, notably impacting the automotive sector. South Korea, while still in negotiations, has been approached by US officials with a proposed investment figure of $400 billion. This is the same initial amount proposed to Japan before it was increased in final negotiations.
Central to the talks with South Korea is the potential reduction of tariffs on automobiles from 25% to 15%, akin to the concessions made with Japan. South Korea may also commit to additional purchases in key sectors, mirroring Japan's agreements to purchase US products such as Boeing aircraft and agricultural goods.
Neither the White House nor the South Korean Ministry of Trade, Industry and Energy have commented on the ongoing negotiations. However, experts note that the recent US-Japan agreement has intensified pressure on South Korea to secure similar terms. Failure to do so could impact South Korea's competitive standing in the global automotive market.
William Cho, a researcher at the Hudson Institute, highlighted the urgency for South Korea, noting that achieving a tariff reduction to 15% would be advantageous, though South Korea faces different challenges than Japan. White House trade advisor Peter Navarro pointed out on Bloomberg TV that South Korean cars currently face the same disadvantage as German vehicles due to the existing 25% tariff, underscoring the need for favorable negotiation outcomes.
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