South Korea Eyes Trade Deal with US Through Shipbuilding Investment

After Japan and the European Union successfully negotiated lower base tariff rates with the Trump administration, South Korea is eager to follow suit. Reports indicate that Seoul is considering a significant investment in U.S. shipyards in exchange for reduced tariffs on Korean cars and other goods.

One of the driving factors behind this diplomatic effort is Korea’s automotive sector, which heavily relies on exporting vehicles to North America. With the new U.S. tariffs in place, Korean automakers face a 25 percent tariff, putting them at a disadvantage compared to their competitors who are subject to a 15 percent tariff.

In a bid to secure a favorable trade deal, South Korea is looking to emulate the strategies employed by Japan and the EU. Japan pledged $550 billion in foreign investments in U.S. industries, while the EU committed to purchasing $750 billion worth of U.S. energy commodities. Seoul is reportedly considering a similar approach with a proposed investment of $200-400 billion in American shipbuilding.

However, analysts caution that simply making investments may not be enough to ensure success. Yang Jong-seo, a researcher at the Overseas Economic Research Institute, noted the shortage of skilled labor in the United States as a potential hurdle that needs to be addressed during negotiations.

It is important to note that the headline figures presented during negotiations may be subject to revision, as seen with the nonbinding nature of the Japanese and European agreements. While Japan and the EU have made significant commitments, the feasibility of these pledges has been called into question by experts in the field.

Ultimately, South Korea’s proposed investment in U.S. shipbuilding represents a strategic move to secure a favorable trade deal with the United States. By leveraging its expertise in the shipbuilding industry and offering a substantial financial commitment, Seoul aims to strengthen its position in the global market and maintain its competitiveness in key sectors.