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South Korea has agreed to invest $350bn in the US in return for lower tariffs on car exports to the world’s largest economy, in a trade deal struck by President Donald Trump and his South Korean counterpart Lee Jae Myung.

Wednesday’s agreement will reduce US auto tariffs on South Korean imports from 25 to 15 per cent, providing relief for the Asian country’s industry, which had been subject to higher duties than its Japanese rivals.

“We reached a deal,” Trump said ahead of a regional leaders’ banquet in Gyeongju on Wednesday evening. “We did a lot of different things. Great session.”

The agreement concludes months of wrangling, during which Seoul balked at Washington’s demands of upfront cash payments.

Kim Yong-beom, Lee’s policy chief, said that as part of the deal, South Korea had agreed to invest $200bn in the US in cash, with annual investments capped at $20bn and profits split between the two countries until the initial investment is recouped.

The remaining $150bn would be accounted for by a shipbuilding partnership between the countries.

In return, the US’s reduction in tariffs would put the South Korean auto industry on a more equal footing with its Japanese competitors, whose exports face a duty of 15 per cent under Tokyo’s trade agreement with Washington.

The US also agreed to ensure that any semiconductor tariffs would not disadvantage Korean chip exports relative to exports from Taiwan, Kim said.

This is a developing story