Trump Revokes Arms Cost Waivers for South Korea and Allies

The United States government revoked exemptions for non-recurring development costs (NC) on arms sales to South Korea and other key allies, including Japan, Australia, and NATO members. These costs, which cover the design, research, and testing of defense equipment, are typically recovered by the Pentagon under the Arms Export Control Act to protect taxpayer funds. The removal of these waivers, notified to Seoul in August 2025, means South Korea will no longer save the approximately 5 percent previously excluded from purchase prices.

This policy shift is attributed to President Donald Trump's "America First" approach, focusing on taxpayer stewardship, reciprocal trade, and addressing trade surpluses. The move reflects a more transactional approach to international alliances.

In response to these changing security and tariff dynamics, South Korean President Lee Jae-myung announced a joint fact sheet finalizing an agreement. Under this arrangement, South Korea will spend 25 billion U.S. dollars on U.S. military equipment by 2030, despite the increased financial burden caused by the loss of the development cost waivers.