Asia
US and South Korea reach trade deal, reducing tariffs from 25% to 15%
President Donald Trump announced on Wednesday that the US would reduce the tariff it applies to imports from South Korea from 25% to 15%. This decision was made as part of an agreement aimed at reducing tensions with a top 10 US trading partner and key Asian ally.
The deal, announced after Trump met with Korean officials at the White House, came amid a flurry of trade policy announcements ahead of a self-imposed August 1 deadline.
Trump had promised to impose higher tariffs on imports into the US from a range of countries starting from that date. Imports from South Korea, a major exporter of computer chips, automobiles, and steel, were subject to a 25% tariff before Wednesday’s last-minute agreement.
“I am pleased to announce that the United States has signed a full and complete trade agreement with the Republic of Korea,” Trump wrote on Truth Social.
The negotiations were an early test for South Korean President Lee Jae-myung, who took office in June following a snap election. Lee said the agreement removed uncertainty from the export environment and brought US tariffs down to or below the level of its main competitors.
“We have overcome a major hurdle,” Lee said in a Facebook post. Trump said Lee would visit the White House “within the next two weeks” for his first meeting with the US president.
South Korea agreed to invest $350 billion in projects of Trump’s choosing and to purchase $100 billion worth of energy products.
He also stated that South Korea would accept American products, including automobiles and agricultural goods, into its markets and would not impose import taxes on them.
Top South Korean officials said the country’s rice and beef markets would not be further opened and that talks were ongoing regarding US demands related to food regulations.
“We avoided the worst and chose the best,” said former South Korean Trade Minister Cheong In-kyo. Much will depend on how the investments in the US are structured, he added.
“Depending on how and where the $350 billion is spent, this fund will be evaluated differently,” he said.
Where will the funds go?
It was not immediately clear how the investment deals would be structured, where the financing would come from, over what time frame they would be implemented, and to what extent their terms would be binding. Trump said South Korea’s additional investments would be announced later.
Kim Yong-beom, the policy chief at the South Korean presidential office, said at a briefing that $150 billion of the $350 billion fund would be allocated to a shipbuilding partnership, with the remaining $200 billion going to chips, nuclear energy, batteries, and biotechnology.
According to Kim, the existing investment plans of South Korean companies will also be part of the fund.
Kim said that “uncertainty is good,” but added that measures were being taken regarding how the funds would be used.
US Commerce Secretary Howard Lutnick announced in a post on X that 90% of the profits from the $350 billion fund would “go to the American people.”
Kim said South Korea understood this to mean the profits would be reinvested.
The energy purchases will include LNG, LPG, crude oil, and a small amount of coal, Kim noted.
“This is within our normal import volume,” Kim said, adding that it could lead to a “slight shift” in the country’s imports from the Middle East to more American sources.
Lutnick said the energy purchases would take place “over the next 3.5 years.”
Lutnick noted that the US tariff rate on South Korean automobiles would be set at 15% and that the country’s semiconductor and pharmaceutical exports would not be subject to harsher treatment than other countries. Steel, aluminum, and copper were not covered by the new agreement.
Turmoil in South Korea
The negotiations took place amid a turbulent political environment in South Korea, following the impeachment of former President Yoon Suk Yeol over his attempt to declare martial law.
South Korea has been a particular target for Trump due to its trade surplus, as well as the costs of the approximately 28,500 US troops stationed in the country for defense against North Korea.
Last year, South Korea recorded a record trade surplus of $55.7 billion with the US, an increase of 25.4% from the previous year.
Although South Korea is one of only three Asia-Pacific countries with a comprehensive free trade agreement with the US, it was not exempted from the new tariffs.
Pressure on South Korea had increased after Japan signed a deal earlier this month to lower Trump’s threatened tariffs to 15%.
As government officials made last-ditch efforts to reach a tariff agreement, South Korea’s Samsung Electronics signed a $16.5 billion chip deal with Tesla.
South Korean battery manufacturer LG Energy Solution also signed a $4.3 billion deal to supply energy storage system batteries to Tesla.
Asia
Pentagon plans covert spy ring for economic war on China, report says
The US Department of War (Pentagon) is reportedly planning to establish an extensive network of deep-cover agents to wage economic warfare against China and other adversaries of the US.
According to a report by The Washington Post citing six sources familiar with the initiative, the plan has not yet been put into effect. The newspaper reported that the initiative remains at the planning stage. The Pentagon, however, denies that any such initiative exists.
The report said the operatives would pose as entrepreneurs or private sector employees while concealing their ties to the US government. The network’s mission would be to gather economic intelligence and counter China.
The programme is led by Tom Rakusa, who spent 39 years at the CIA. Rakusa serves as a senior adviser to Deputy Secretary of Defence Steve Feinberg.
The proposed spy network is seen as part of a broader policy by the Donald Trump administration to sharpen economic competition with other countries.
The US is already resorting to tariffs, export controls, and investment in strategic sectors, alongside expanding its economic intelligence gathering.
According to The Washington Post, the new initiative demonstrates the Pentagon’s growing influence under the Trump administration. The department is currently seeking a record budget of $1.5 trillion.
Trade war flares up again with Trump’s return to the White House
The trade friction between the US and China flared up again following Donald Trump’s return to the White House. In April 2025, Washington raised tariffs on Chinese goods to as much as 145%, and Beijing retaliated with tariffs of up to 125%.
In May, US Secretary of State Marco Rubio described China as the primary geopolitical challenge facing Washington. Rubio said that to avoid war, the two sides needed to manage their conflict of interests.
In July, Chinese expert Zheng Yongnian did not simply warn that underestimating the US could prove to be a “fatal mistake”; he stated it explicitly.
According to Zheng’s assessment, the US maintains its primacy through the role of the dollar, its military superiority, and its technological advantages.
Even so, the two sides agreed in June to declare a truce and lower tariffs. In autumn 2026, the US and China extended their trade truce until 10 January 2027.
US Treasury Secretary Scott Bessent said the extension would give the parties more time to discuss economic issues.
Trade deals do not eliminate the strategic contradictions between the two countries. Financial Times columnist Rana Foroohar likened the race between the two nations for commercial, technological, and geopolitical influence to the 19th-century “Great Game” between the Russian and British empires.
Foroohar cited China’s standing in shipbuilding and commercial maritime transport, as well as its expanding footprint in overseas ports, among its key advantages.
Asia
Japan plans curbs on short-term home sales to cool urban prices
Japan’s ruling Liberal Democratic Party (LDP) plans to restrict short-term property trading to rein in surging home prices in major urban centres, particularly Tokyo.
Led by Prime Minister Sanae Takaichi, the party aims to make support for working households a core priority ahead of local elections scheduled for April next year.
The LDP’s research commission on housing and land policy met on Wednesday to discuss the issue.
According to a report by the Nikkei Asia newspaper, Commission Chair and LDP lawmaker Midori Matsushima said at the opening of the meeting: “Prices of newly built condominiums across Tokyo’s 23 wards have doubled over the past decade. We must work on measures ensuring that people who wish to live in these homes can actually afford to buy them.”
Homeownership in the capital has become virtually unattainable for broad segments of the population. According to data from the Real Estate Economic Institute, the average sale price of a newly built condominium in Tokyo’s 23 wards rose %18.5 in fiscal 2025 compared with the previous year, reaching 137.84 million yen (around $872,000).
Meanwhile, statistics from the Ministry of Labour show that the average annual income of a full-time worker in the capital remained at 6.78 million yen in fiscal 2025. This widening gap between incomes and residential property prices is directly shaping political priorities.
During its campaign for the House of Representatives election in February, the LDP pledged to curb speculative transactions across metropolitan Tokyo and other regions. Earlier this month, a party project team focused on policies concerning foreign nationals also submitted a recommendation urging the government to introduce immediate tax measures against rising home prices.
Under current legislation, profits realized from properties sold within five years of acquisition are classified as “short-term capital gains”. These returns face a tax rate approaching %40, including income tax and local inhabitant tax.
Although this rate is twice the approximately %20 levied as “long-term capital gains” tax on properties held for more than five years, several party members argue it remains insufficient to deter speculation. Calls to tighten the framework may be considered as part of the annual tax reform package to be drafted in December alongside the LDP’s coalition partner, the Japan Innovation Party.
The ruling bloc wants to present concrete housing pledges to voters heading to the polls in April across numerous urban centres, including 22 of Tokyo’s wards where local assembly terms expire.
“We need to support families with children, who are typically at the stage of purchasing a home,” a senior LDP official said.
Opposition parties are also preparing alternative proposals that target not only prospective homebuyers, but also residents forced into the rental market by high property prices and now affected by escalating rents.
Tax steps take precedence over limits on foreign buyers
Several countries seeking answers to housing affordability pressures have imposed direct restrictions on foreign purchasers. In South Korea, real estate policies played a major part in the declining public approval ratings of President Lee Jae Myung.
In August 2025, authorities in Seoul introduced an approval requirement for foreign nationals buying homes in the capital and adjacent areas, while also mandating that buyers reside in the properties for at least two years.
Canada and Australia have enacted temporary bans on foreign residential purchases, while Singapore levies a %60 additional stamp duty on foreign buyers.
The role of overseas investors in Japan’s property market also drew debate during the February election. However, restrictions aimed directly at foreign nationals are viewed as potentially conflicting with international trade and services agreements.
Consequently, rather than imposing restrictions based on the nationality of buyers, the government is discussing tax measures aimed at speculative real estate deals, such as rapid resales.
Fears that sharp market measures could shake regional banks
Concerns have also surfaced that aggressive steps to force down prices could harm the wider national economy.
A senior LDP tax official cautioned that a steep drop in land prices could weaken local financial institutions, warning: “We must consider the impact on regional banks.”
The real estate sector accounts for roughly %18 of total lending by Japanese banks. This proportion sits well above the %10 level recorded during Japan’s bubble economy of the mid-to-late 1980s.
At certain regional banks, property lending accounts for nearly half of total loan portfolios.
According to March 2025 data from the Financial Services Agency, approximately one-quarter of all loans extended by regional banks to the real estate sector are concentrated directly in Tokyo’s five central wards.
Buoyant asset valuations, supported in part by rising stock indices, have underpinned strong public approval for the Takaichi administration. Observers note that property interventions designed to cool the market could drag down equity prices and weaken the government’s standing.
A senior official on the LDP research commission stressed that decision-makers must act with caution regarding the scope and timing of any measures intended to bring price increases under control.
Asia
South Korea plans $120B spend on eight US nuclear power plants
South Korea will spend $120 billion to construct eight nuclear power plants in the US under an agreement that provides for $350 billion in investments in exchange for lower tariffs.
The South Korean government also announced that Seoul and Washington will begin examining a liquefied natural gas (LNG) project in Alaska comprising a large-scale pipeline to transport natural gas from the north of the state to the south, alongside the construction of an LNG terminal for exports overseas.
Seoul stated that a decision regarding the LNG project will be made following a commercial feasibility study. However, US President Donald Trump said that South Korea would invest $54 billion in the project, pointing to an apparent lack of full coordination between the two sides on the matter.
Trade and Industry Minister Kim Jung-kwan said in a statement: “This announcement opens a new horizon of cooperation where the two countries join forces to develop joint commercial ventures in strategic areas directly linked to economic security and future sectors such as artificial intelligence, nuclear energy, and LNG.”
“We will adhere to the principle of prioritising national interests and investing solely in commercially viable projects,” Kim said.
Speaking at the White House, Trump characterised South Korea’s plans as “one of the largest energy infrastructure investments in American history”.
The announcement followed a meeting between Trump and South Korean President Lee Jae Myung roughly one year ago at the APEC Economic Leaders’ Meeting held in South Korea, where they agreed on the creation of a $350 billion investment fund.
Under that agreement, $150 billion was allocated to the shipbuilding sector and $200 billion to other sectors. In return, the US announced it would reduce tariffs imposed on goods imported from South Korea from 25% to 15%.
Under the nuclear power project, South Korea’s state-controlled utility will build two plants in the US, while Pennsylvania-based Westinghouse Electric will construct six plants.
According to the South Korean government, this will mark the first instance in which a foreign country builds its own nuclear power plants in the US.
South Korean firms are also evaluating the possibility of acquiring a stake in Westinghouse as part of negotiations over sharing profits generated by the project.
South Korea additionally announced that it will build a $22.3 billion natural gas-fired power plant in Texas with a capacity of 6,472 megawatts.
The facility will be designed to supply electricity directly to nearby data centres. The project’s first phase is targeted to begin commercial operations in 2029, with full-capacity operations slated for 2032.
Seoul also disclosed that it had agreed to allow the US to receive 50% of the profits generated by the projects until South Korea recoups all of its investments.
After South Korea fully recovers its total investment amount, 90% of the profits will go to the US.
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