US, South Korea reaffirm pledge to reach trade deal before deadline

WASHINGTON - South Korea and the United States reaffirmed their commitment to pursue a mutually beneficial trade agreement ahead of the Aug 1 deadline when duties are set to rise, the Asian nation’s Industry Ministry said.

US Commerce Secretary Howard Lutnick and South Korea’s Industry Minister Kim Jung-kwan discussed sectoral and reciprocal tariffs on July 24, with Mr Kim emphasising the need to ease trade barriers, according to a statement from South Korea’s Ministry of Trade, Industry and Energy.

Both sides agreed to strengthen manufacturing cooperation and continue discussions, the statement showed on July 25. 

The meeting came after the

US postponed the so-called “2+2” dialogue

originally planned for July 25, which would have brought together top finance and trade officials from both countries, including Treasury Secretary Scott Bessent.

The meeting involving Mr Bessent is being delayed due to a scheduling conflict, a Treasury spokesperson said in an e-mailed response.

South Korea had viewed the July 25 meeting as a critical opportunity to advance trade negotiations and avert an increase in sweeping tariffs to 25 per cent threatened by US President Donald Trump.

In recent weeks, Seoul has been

weighing politically sensitive concessions

in areas like agriculture, energy and defence to shield its export-reliant economy. 

Mr Kim also met with US Energy Secretary Chris Wright on July 23 to discuss cooperation on clean energy and energy security, the statement from the Industry Ministry said.

Separately, Trade Minister Yeo Han-koo is scheduled to meet with Trade Representative Jamieson Greer. 

As part of the broader negotiations, the two countries are exploring the creation of a joint investment fund to channel South Korean capital into US-based projects, according to sources familiar with the talks.

Yonhap News reported on July 24 that Seoul is preparing to propose at least US$100 billion (S$128 billion) in investment pledges, which would be secured through consultations with the nation’s major conglomerates.

Failure to reach a deal could put Korean exporters at a disadvantage and would be a setback as overseas shipments were equivalent to more than 40 per cent of South Korea’s gross domestic product in 2024.

Earlier this week, Japan secured a trade agreement with the US that includes reduced 15 per cent tariffs in exchange for supporting a US$550 billion fund and committing to strategic purchases from American suppliers. BLOOMBERG