South Korea trades $150B shipbuilding deal for lower tariffs

South Korean President Lee Jae Myung met Trump at the White House on Aug. 25, 2025, to finalize a $150 billion shipbuilding investment deal. The agreement commits Korean companies to build new U.S. shipyards and train American workers.

Trump reduced Korea's tariff rate from 25% to 15% on cars, computer chips, and other exports in exchange for the investment package. This preferential rate saves Korean exporters billions annually compared to competitors facing higher tariffs.

Korean officials branded the initiative 'Make American Shipbuilding Great Again' while Trump praised their ships saying 'We love their ships.' Hanwha Group completed a $100 million acquisition of Philadelphia shipyard in Dec. 2024 to begin U.S. operations.

U.S. shipbuilding collapsed from global leadership to 0.1% of world market share while China captured over 53%. The Korean investment attempts to rebuild American maritime capacity through foreign expertise and technology transfer.

Korean Air announced a $50 billion deal to purchase 103 Boeing aircraft (valued at $36.2 billion for aircraft, plus $13 billion for 20-year engine maintenance) as part of the broader economic partnership. This represented the airline's largest single purchase in history.

Lee praised Trump as uniquely capable of improving relations with North Korea and requested a Trump-Kim summit. Trump immediately agreed to meet Kim Jong Un in 2025, reviving stalled nuclear diplomacy.

Commerce Secretary Howard Lutnick negotiated the tariff reductions during intensive Jul. 2025 talks with South Korean Deputy Prime Minister and Finance Minister Koo Yun-cheol. Korean officials emphasized the shipbuilding fund was crucial to securing the reduced tariff rate.

The deal demonstrates how countries package massive corporate investment pledges to purchase favorable trade treatment. Korea's strategy combines defense manufacturing, commercial aerospace, and diplomatic gestures to secure 🌲Washington's approval.