The United States and South Korea have finalized a new trade and Defence agreement to reduce tariff pressures, improve economic stability and expand cooperation in key strategic sectors. After months of negotiations, both countries stated that the deal will strengthen defence ties and create new opportunities in technology and advanced industries.
Tariff Relief and Defence Boost: United States and South Korea Finalise Strategic Partnership Agreement
Reduced Tariffs for Trade Stability
A major part of the agreement is the reduction of US import tariffs on South Korean products from 25% to 15%. Both governments believe this new tariff structure will help stabilize bilateral trade and reduce uncertainty for businesses.
The agreement also includes a rule that allows South Korea to request payment schedule adjustments if investment conditions cause market instability.
Defence Partnership: Nuclear Submarine Development
South Korea will move forward with building nuclear-powered submarines under this new partnership. The submarines are expected to be built by South Korea, though earlier statements suggested construction may take place at a Korean-owned facility in the US.
This represents one of the most significant defence collaborations between the two nations in recent years.
Strategic Investments and Key Sectors
South Korea has committed to invest $350 billion in the United States:
- $200 billion in cash investments
- $150 billion for shipbuilding projects
The agreement also expands cooperation in:
✔ Artificial Intelligence (AI)
✔ Nuclear power
✔ Advanced shipbuilding
This follows earlier commitments involving large purchases of liquefied natural gas (LNG) to support American energy suppliers.
Exam-Oriented Notes (Quick Revision)
| Key Point | Details |
|---|---|
| Tariff Reduction | US tariff on South Korean goods cut from 25% to 15% |
| Investment | South Korea to invest $350 billion in the US |
| Defence | Cooperation to develop nuclear-powered submarines |
| Strategic Sectors | Partnership in AI, nuclear energy, shipbuilding |
| Flexibility Clause | Payment adjustments allowed if markets become unstable |
Question & Answer
Q1. The new US–South Korea agreement reduces tariffs on South Korean products from:
(a) 30% to 20%
(b) 25% to 15%
(c) 20% to 10%
(d) 18% to 12%
Answer: 25% to 15%
Q2. Under the deal, South Korea will collaborate with the US to build:
(a) Space launch vehicles
(b) Nuclear-powered submarines
(c) Hypersonic aircraft
(d) Missile defence shields
Answer: Nuclear-powered submarines
Q3. How much total investment has South Korea pledged in the US?
(a) $200 billion
(b) $150 billion
(c) $350 billion
(d) $500 billion
Answer: $350 billion
Q4. Which sectors are included in the new strategic cooperation?
(a) AI, Nuclear power, Shipbuilding
(b) Tourism, Agriculture, Fisheries
(c) Pharmaceuticals, Textiles, Retail
(d) Education, Biotechnology, Banking
Answer: AI, Nuclear power, Shipbuilding
Q5. The agreement allows Seoul to request payment adjustments if:
(a) The US increases tax rates
(b) Market conditions cause instability
(c) Oil prices rise sharply
(d) Defence exports decrease
Answer: Market conditions cause instability
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