Seoul, South Korea - South Korea will "move forward" with the US in building nuclear-powered submarines, President Lee Jae Myung said Friday, after a security and trade agreement was finalized.

Analysts say developing the atomic-powered vessels would mark a significant leap in Seoul's naval and defense industrial base, allowing it to join a select group of countries with such vessels.

"One of the greatest variables for our economy and security – the bilateral negotiations on trade, tariffs, and security – has been finalized," Lee told a news conference, adding the two countries had agreed to "move forward with building nuclear-powered submarines."

Seoul had secured "support for expanding our authority over uranium enrichment and spent-fuel reprocessing," he said.

A joint fact sheet outlining the deal said both sides would "collaborate further through a shipbuilding working group" to "increase the number of US commercial ships and combat-ready US military vessels."

Beijing, on Thursday, voiced caution over a Washington-Seoul deal on nuclear submarine technology.

The partnership "goes beyond a purely commercial partnership, directly touching on the global non-proliferation regime and the stability of the Korean Peninsula and the wider region," Dai Bing, China's ambassador to Seoul told reporters.

Details remain murky on where the nuclear submarines will be built.

US President Donald Trump said on social media last month that "South Korea will be building its Nuclear Powered Submarine in the Philadelphia Shipyards, right here in the good ol' U.S.A."

US nuclear technology is among its most sensitive and tightly guarded military secrets.

However, Seoul's national security advisor Wi Sung-lac said on Friday that "from start to finish, the leaders' discussion proceeded on the premise that construction would take place in South Korea."

"So the question of where construction will take place can now be considered settled," he added.

As part of the deal, South Korea has pledged to buy $25 billion-worth of US military equipment and plans to "provide comprehensive support for US Forces Korea amounting to $33 billion."

Details of a tariffs agreement were also announced.

Trump unexpectedly declared at last month's APEC summit that the two sides had reached a deal on an investment package and auto tariffs, before clarifying it was "pretty much" finalized.

Seoul later said the $350-billion agreement included $200 billion in cash investment and $150 billion in shipbuilding cooperation, adding that both sides agreed to keep reciprocal tariffs and lower auto tariffs at 15%.

Semiconductor tariffs, however, were not included in the deal at the time.

The fact sheet stated that South Korea's semiconductor tariffs will be "no less favorable than terms that may be offered in a future agreement covering a volume of semiconductor trade at least as large as Korea's," but did not give further details.

South Korea is home to Samsung Electronics and SK hynix and produces a significant chunk of high-end chips that have become the lifeblood of the global economy, powering everything from smartphones to missiles.

The country's semiconductor exports reached a record high of $142 billion in 2024, accounting for more than a fifth of the country's total exports.