South Korea: 15% Tariff on Autos to Be Retroactive to Nov. 1

Goods whose most-favored nation tariff is above 15% -- if they were covered by the previous South Korea free trade deal -- will face only 15% tariffs, "reflecting the advantages of being a signatory to the FTA," South Korea said, according to an unofficial translation.

"On July 30th, the government reached a broad agreement on Korea-U.S. tariff negotiations, focusing on reciprocal tariff reductions and tariff reductions on items and increased investment in the U.S. As a result of the agreement, reciprocal tariffs were reduced to 15%, effective August 7th. However, the automobile tariff was not immediately reduced as agreed. This was due to follow-up negotiations due to disagreements over the structure and profit sharing details of the $350 billion U.S. financial investment package," Kim Yong-beom, director of the presidential policy office, said.

The same official reportedly told reporters in South Korea that the pact would be submitted to the National Assembly in November, and, once ratified, the 15% treatment for autos is expected to be retroactive to Nov. 1. That was how the U.S. treated Japan and the EU, when their processes for approval were launched.

A White House spokesperson didn't respond to a request for confirmation on that date.

"Reciprocal tariffs will remain at 15%, as already in effect since the July 30 agreement. Tariffs on automobiles and automobile parts will also be reduced to 15%. Among tariff items, pharmaceuticals and wood products will receive most-favored-nation treatment, while aircraft and parts, generic drugs, and natural resources not produced in the United States will be tariff-free," the Korean statement said.

Autos are the No. 1 South Korean export to the U.S.

"In the case of semiconductors, we decided to apply tariffs at a level that is not disadvantageous compared to our main competitor, Taiwan," the statement said.

The disagreements on investments were solved Oct. 29, Kim said.

"The $350 billion in financial investment in the US consists of $200 billion in cash investment and $150 billion in shipbuilding cooperation," his statement said.

"First, the $200 billion is similar in structure to the $550 billion financial package Japan agreed to with the United States. However, the key point is that we have set the annual investment cap at $20 billion. In other words, the $200 billion investment will not be made all at once, but rather will be made annually within the $20 billion limit, based on project progress. This will be within the capacity of our foreign exchange market and minimize the impact on the market."

South Korea also emphasized that the investments will be "'commercially reasonable'" and guarantee principal and interest. "Commercially reasonable means that the Investment Committee, in good faith, determines that the project will generate sufficient cash flow to recoup the investment amount." He said South Korea and the U.S. will split profits until the principal and interest of Korean investors is repaid.

He added, "We thoroughly defended further market openings in the agricultural sector, including sensitive areas such as rice and beef."

President Donald Trump, at a dinner in South Korea, said that when he met with South Korea's president earlier that day, "a lot was determined, and we made our deal, pretty much finalized a trade deal, and we discussed some other things having to do with national security."

The White House issued a fact sheet that didn't talk about tariffs, but did talk about purchase promises by South Korea, including $36 billion worth of Boeing planes, almost $14 billion worth of GE Aerospace engines for the planes, and billions of dollars in defense purchases and LNG.