Trump Arranged Significant Trade Agreements - However, Imports Face Tariff Increases as Liberation Day Tariffs Take Effect
In a series of significant trade agreements, President Trump has secured deals with South Korea and the European Union (EU), aiming to reshape the US trade landscape.
The deal with South Korea, announced in late July 2025, includes South Korea's commitment to invest $350 billion in US projects selected by Trump, along with a $100 billion purchase of American energy products such as liquefied natural gas (LNG). Under this agreement, South Korea agreed to a reduced tariff rate of 15% on goods imported from South Korea into the US, down from a previously threatened 25%, which was set to take effect on August 1, 2025.
Meanwhile, US imports into South Korea are set to face no tariffs, and South Korea has agreed to be "completely open" to trade with the US, including acceptance of American automobiles, agricultural products, and other goods. The agreement aligns South Korea’s tariff levels with those recently agreed upon by US deals with Japan and the EU.
Notably, the EU has pledged to buy $750 billion in American energy, invest $600 billion in new money in the US, and purchase additional military equipment. These commitments are part of a broader strategy to boost US energy exports and improve national security.
Mark DiPlacido, a policy adviser at the trade protectionist think tank American Compass, agreed that the Trump administration's trade strategy is working, helping to reduce US trade deficits, reshore industry, and generate quality American jobs. However, Scott Lincicome, vice president of general economics at the libertarian Cato Institute, warned that US tariffs will result in hundreds of billions of dollars in new taxes paid for by American companies and consumers.
The US tariffs system has gone from simple and transparent to a labyrinth of new requirements, according to Scott Lincicome. Sectoral tariffs, including a 50% rate on foreign copper, aluminum, and steel, and a 20% on overseas pharmaceuticals, will go into effect.
President Trump's trade deal with South Korea and the EU follows a series of tariff hikes announced in April. The president announced a 15% tariff on the European Union, significantly higher than previous levels. Trump has allowed extensions for China and Mexico, two of America's top economic partners. Notably, Canada looks set for a new 35% duty.
The administration has predicted the Aug. 1 deadline will push others to follow suit in the coming weeks and months. Upcoming rulings by federal courts on Trump's powers to tax imports without congressional approval could affect the tariffs.
Richard Stern, acting director of the Thomas A. Roe Institute for Economic Policy Studies at the conservative Heritage Foundation, stated that the deals will ensure Americans' intellectual property isn't being stolen and force a quicker decoupling from China, which is critical for national security.
In summary, the Trump administration has secured major agreements accounting for about one-third of American trade, aiming to reshape the US trade landscape by reducing trade deficits, reshoring industry, and generating quality American jobs. However, these agreements have also led to concerns about increased taxes for American companies and consumers and the complexity of the US tariffs system.
- In the US-EU agreement, the EU pledged to pay a higher tariff of 15%, a significant increase from previous levels, for certain imported goods.
- The reshaping of the US trade landscape by President Trump's deals with South Korea and the EU has sparked discussions on the potential increases in taxes for American companies and consumers due to the complexity of the US tariffs system.
