South Korea and the US have finalised details of their tariff negotiations on 29 October, with Seoul promising $20bn/yr of cash investment, as well as purchases of 3.3mn t/yr of US LNG, according to both governments.
Seoul announced that the $350bn financial investment in the US will consist of $200bn cash and $150bn worth of co-operation in US shipbuilding, with the cash investment capped at $20bn/yr, Kim Yong-Beom, the South Korean president's chief of staff said, after the South Korea-US summit at the Asia-Pacific Economic Cooperation (APEC) on 29 October.
The chief of staff also added that the $20bn annual cash investment will depend on business progression and will remain within the capacity of South Korea's foreign exchange market to minimise its impact. The $150bn worth of shipbuilding co-operation will involve raising funds through long-term financing options such as the use of guarantees, Kim said.
In return, the US has agreed to lower tariffs imposed on South Korean auto and auto parts to 15pc, down from the current 25pc.
While the South Korean government's announcement did not mention any specific investments in US energy, according to the White House, Seoul will continue with its previously announced plan to purchase 3.3mn t/yr of US LNG. South Korea's state-owned gas incumbent Kogas signed long-term agreements with sellers such as Trafigura and TotalEnergies to receive LNG sourced from US producers like Cheniere in September. Under the preliminary deals, Kogas is set to receive 1mn t/yr of US LNG over 2027-36 from TotalEnergies, and another 700,000 t/yr from Trafigura.
Based on the prevailing regional spot LNG price — or northeast Asia delivered LNG price for December arrival — 3.3mn t of LNG is equivalent to around $1.9bn.
Neither party has mentioned about the proposed 20mn t/yr Alaska LNG project, while South Korea agreed to invest $100bn into US LNG, as part of a wide-ranging trade deal on 30 July. The project was last estimated to cost $44bn and is looking to finalise its front-end-engineering design work on the first phase next month, US interior secretary Doug Burgum said.
Seoul had previously voiced concerns over discrepancies between the agreement discussed with the US and the memorandum of understanding received, which indicated that the Washington expects to receive the $350bn investment in equity, while Seoul "expected it to be a loan, guarantee and some investment, in line with international investment practices", Kim said on 26 September after the South Korean president Lee Jae-Myung met with US Treasury Secretary Scott Bessent at the UN headquarters in New York on 24 September.
"[Under this term], unless there is an unlimited currency swap, it is impossible to move forward," Kim previously told reporters.
