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S. Korea-US tariff deal stalls on documentation amid interpretation gap

06/08/2025    347

South Korea and the United States have reached a tariff deal, but talks on a formal agreement have yet to start. 

Disagreements over key issues like rice market access and profit-sharing are holding things up, and there is still no decision on how or when to put the deal in writing.

The South Korean government says a verbal agreement is not enough and plans to begin talks soon to finalize the details. With a summit between President Lee Jae-myung and U.S. President Donald Trump coming up, officials see it as a possible breakthrough. However, some are concerned the United States may bring up new demands during the meeting. Others say the details should be settled in advance to avoid last-minute pressure.

According to the Ministry of Trade, Industry and Energy on Aug. 5, the government sees a strong need to formalize the recent tariff agreement with the United States. “A verbal agreement alone cannot guarantee long-term implementation,” said a ministry official.

The two countries on July 31 agreed to lower mutual tariffs from 25% to 15%. In return, South Korea pledged to set up a $350 billion strategic industry cooperation fund, which includes support for U.S. investments in sectors like shipbuilding, and to import $100 billion worth of U.S. energy.

Follow-up talks will focus on the fund’s management and easing non-tariff barriers. After returning from Washington on Aug. 1, Deputy Prime Minister and Finance Minister Koo Yun-cheol said, “The devil may be in the details, but I believe the angel is too,” adding that Seoul will work to ensure a win-win outcome.

However, uncertainties are growing due to conflicting explanations from both sides. On rice market access, the South Korean government insists the issue was not discussed, while the U.S. described the deal as a “historic access” for its products.

The U.S. claims it will receive 90% of the fund’s returns, while Seoul maintains the fund’s structure has yet to be finalized. The absence of a formal written agreement is fueling new tensions.

The government expects the upcoming summit between Lee and Trump to be a key opportunity to finalize the agreement, as many details are likely to be decided then. But officials inside and outside the government warn that the deal should be clarified before the meeting, given the possibility that Trump could demand further openings in areas like rice, beef, or digital trade.

Bark Tae-ho, former trade minister and current director at law firm Lee & Ko’s Global Commerce Institute, said, “This is not the comprehensive deal the government initially aimed for,” and added that Trump could also raise issues like defense cost-sharing at the summit. “It’s better to settle the agreement clearly in advance to avoid putting pressure on President Lee,” he said.

A government official echoed the concern, saying, “Given President Trump’s track record, it’s almost certain he’ll push for more access to Korea’s rice and beef markets during the summit.”

While the government favors a legally binding agreement, it is also considering a phased approach—starting with a basic written summary and continuing talks later, similar to the U.K.’s deal with the U.S. in May.

“It’s only a matter of time,” said a trade ministry official. “Whether it’s a formal agreement or a joint statement, we’ll need more discussions with the U.S.”

Japan, which finalized a similar deal with the U.S. earlier, is also dealing with interpretive gaps. The U.S. sees Japan’s $550 billion investment pledge as equity, while Japan says only 1 to 2% is direct investment, with the rest made up of guarantees and commitments. To avoid further demands, Tokyo has chosen to keep the details vague and avoid full documentation.

Source: The Chosun Daily

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