South Korea proposes shipbuilding pact to secure last-minute US trade deal

South Korea is advancing a key proposal to forge a shipbuilding partnership with the United States in a last-ditch effort to finalise a trade agreement that would avert a steep 25% tariff rate.

Although specifics remain scarce, South Korean media informed that Seoul has put forward a multi-billion-dollar initiative dubbed “Make American Shipbuilding Great Again,” Caliber.Az reports. 

South Korea’s Industry Ministry declined to comment on the matter.

“We confirmed the US side’s strong interest in the shipbuilding sector and the two countries agreed to work together to develop mutually acceptable terms that include shipbuilding cooperation,” said South Korea’s presidential office in a statement on July 26.

As Asian nations concluded various trade agreements last week, South Korean negotiators have been striving to maintain momentum with their US counterparts, even as Washington’s focus shifts towards the European Union and China.

On July 27, the US and EU announced a pact imposing 15% tariffs on most EU exports to the US, including automobiles. This new agreement, following a similar deal with Japan last week, increases pressure on South Korea — Asia’s fourth-largest economy — to secure its own deal.

Negotiations in Seoul have been hampered by internal political challenges, leaving the country among the largest Asian economies still without a concluded trade agreement. Other major regional exporters engaged in talks include India and Taiwan.

South Korea’s finance and foreign ministers are scheduled to meet with US officials this week in a final push to close negotiations. The Seoul government emphasises both sides’ commitment to reaching a deal before the August 1 deadline set by US President Donald Trump.

Additional discussion points reportedly include expanded access to South Korea’s agricultural market and the creation of a fund to invest in American projects, mirroring elements of Japan’s recent agreement.

Japan’s deal features a $550 billion fund tied to tariff reductions to 15%, and South Korea appears to be aiming for a similar structure covering autos and other sectors.

Opening agricultural imports further raises the stakes for South Korea’s new administration. Previous attempts to liberalise beef imports triggered widespread protests, and loosening rice import restrictions could encounter even stronger opposition.

Without a deal, South Korea’s GDP is forecasted to contract by 1.7%, with volatility and uncertainty potentially causing even greater economic damage. Last year, overseas shipments accounted for more than 40% of South Korea’s GDP.

“Japan’s trade deal paints a positive backdrop but also sets a high bar for others,” said Morgan Stanley economist Kathleen Oh. “Korea and Taiwan may need to ramp up new investment schemes to increase agricultural and energy imports and expand market access, as seen in Japan’s case.”

By Aghakazim Guliyev