Massive Investment Agreement: $350 Billion from Seoul in Exchange for US Tariff Reductions and Expanded Nuclear Cooperation
On Friday, South Korea and the United States reshaped the contours of their strategic partnership by signing a memorandum of understanding that outlines a massive investment commitment of $350 billion from Seoul, in exchange for a reduction in Washington’s tariffs, according to the Korean Ministry of Industry.
The memorandum was electronically signed by South Korean Minister of Industry Kim Jong-kwan and US Secretary of Commerce Howard Lutnick, as reported by the Yonhap news agency citing the Korean Ministry of Trade, Industry, and Energy.
On October 29, the two sides finalized the details of this broad agreement, which encompasses $200 billion in direct payments with a maximum of $20 billion per year, in addition to $150 billion aimed at enhancing bilateral cooperation in shipbuilding.
Under the joint document released by the White House, the United States granted South Korea the green light to begin constructing nuclear-powered submarines, a topic that remained central in discussions during the summits between Presidents Yoon Suk-yeol and Donald Trump in August in Washington and October in Gyeongju.
This development is seen as the culmination of a long process through which Seoul has sought to bolster its strategic capabilities in the face of increasing military threats from North Korea. Washington is also supporting South Korea’s efforts to access enrichment and reprocessing nuclear fuel technology for peaceful purposes, within the framework of the civilian nuclear cooperation agreement known as “123.”
Seoul plans to acquire four conventionally-armed nuclear-powered attack submarines, each with a displacement of 5,000 tons, by the mid-2030s.
On the military front, the United States has reiterated its commitment to an extended deterrence umbrella, encompassing all its capabilities, alongside the continued presence of its forces in South Korea, which currently numbers around 28,500 troops.
In turn, South Korea has committed to raising its defense spending to 3.5% of its gross domestic product at the earliest opportunity and to allocate $25 billion for acquiring military equipment from the US by 2030.
