Trade Update: Key Announcements Related to China, S. Korea, and Japan

There are several trade developments of note that involve U.S. agreements with China, South Korea, and Japan.

China:

President Trump has announced trade deals with China after meeting Chinese leader Xi Jinping on Thursday. According to his statement, the U.S. will lower the tariffs implemented earlier this year as punishment on China for selling chemicals used to make fentanyl from 20% to 10%. This change reduces the total combined tariff rate on China from 57% to 47%.

In addition, China’s Commerce Ministry stated that the U.S. will pause its measures under its Section 301 investigation against China’s shipbuilding and maritime industries for one year. And China will pause its countermeasures against the U.S. for a year in response to the U.S. suspensions taking effect. The Ministry also said the two sides will “properly” resolve TikTok-related issues.

South Korea:

The following are details released regarding a new U.S.-South Korea trade deal.

Tariffs on U.S. imports of Korean auto and auto parts at 15%, down from the current 25%. This makes them equal to Japanese competitors (see below).

South Korean manufacturers of wood products and pharmaceuticals will face the lowest tariffs among countries, while aircraft parts and generic drugs will face zero tariffs.The government-controlled Korea Gas Corporation also signed long-term agreements to purchase U.S. liquefied natural gas.

Japan:

The U.S. and Japan signed a previously agreed-upon trade deal, formalizing 15% tariffs on imported Japanese goods. The amount is lower than the 25% initially threatened by Trump. In exchange, Japan has pledged to invest $550 billion in U.S. industry and open its market to American rice, cars, and defense equipment. The two sides also signed a framework for U.S.-Japan cooperation in supplying critical minerals and rare earth metals to each other.

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