Lee Tae-woo, right, Korea's new chief negotiator for the defense cost sharing with the United States, shakes hands with his U.S. counterpart Linda Specht during an initial signing ceremony of the 12th Special Measures Agreement at Ministry of Foreign Affairs headquarters in Seoul, Thursday. Courtesy of Ministry of Foreign Affairs

Korea will contribute 1.52 trillion won ($1.13 billion) toward the cost of stationing U.S. troops in the country in 2026, reflecting an 8.3 percent increase from 2025, the Ministry of Foreign Affairs said Friday.

The ministry announced the results of the 12th Special Measures Agreement (SMA), which outlines Seoul's financial obligations for hosting 28,500 U.S. Forces Korea (USFK) troops. The funding also covers wages for Korean workers, military facility construction, and logistics support.

The new agreement will come into effect in 2026, following the expiration of the current six-year 11th SMA at the end of 2025.

"The validity period of the 12th SMA is from 2026 to 2030, spanning five years. The total amount for the first year, 2026, has been set at 1.5192 trillion won, an 8.3 percent increase compared to the 2025 total of 1.4028 trillion won," the ministry said in a statement.

Under the new deal, the two sides agreed to base yearly increases on the consumer price index (CPI) growth rate, replacing the defense budget increase rate used in the 11th SMA. Additionally, an upper limit has been established to ensure that the annual increase does not exceed five percent, the ministry noted.

The CPI was used in the 8th and 9th agreements, while the defense budget increase was used in the 11th SMA. Linking the increase to the defense budget was seen as placing a heavier burden on Korea, as the defense budget typically grows by around four percent annually, while the CPI averages about two percent.

The latest agreement was reached after eight rounds of negotiations, led by Korea's chief negotiator, Lee Tae-woo, and his U.S. counterpart, Linda Specht, involving officials from the foreign, defense, and economy ministries of both sides. The talks, which began in April, concluded earlier this week.

The two sides held an initial signing ceremony in Seoul on Thursday, with a formal signing by senior officials at the vice-ministerial or ministerial level to follow, pending Cabinet approval and presidential ratification.

"Korea and the U.S. have reached a conclusion in a relatively swift manner based on mutual understanding and the spirit of alliance. This will contribute to our shared goal of ensuring the stable stationing of USFK troops and maintaining a united defense posture," a foreign ministry official told reporters.

The official also noted that, beyond cost-sharing agreements, both sides had agreed on a set of measures aimed at enhancing the transparency of the SMA, including the elimination of a clause supporting the maintenance of U.S. assets outside the Korean Peninsula. Under the new deal, SMA costs will only cover expenses for the maintenance of assets deployed within the Korean Peninsula.

Former U.S. President and Republican presidential candidate Donald Trump speaks during a campaign rally at Ed Fry Arena in Indiana, Pa., Sept. 23. AFP-Yonhap

Diplomatic observers saw the new defense cost sharing deal as more favorable to Korea than previous deals, but uncertainty lingers over its fate if former President Donald Trump is reelected in the upcoming Nov. 5 elections.

Cha Du-hyeogn, a senior researcher at the Asan Institute for Policy Studies, noted that the 12th SMA avoided the steep increases seen in prior agreements, such as the 13.9 percent hike in the 11th deal.

“Returning to CPI-based increases with a 5 percent cap is a more balanced approach and represents an improvement over previous SMA clauses,” he said.

Cha added that the deal is likely to proceed smoothly if Democratic candidate Kamala Harris wins the presidency, but if Trump is reelected, he may seek to overturn the agreement.

“I wouldn't put too much weight on a Trump victory at this point, but if he returns, he may want to revisit the SMA deal,” he said.

Unlike in Korea, where the SMA must be approved by the National Assembly, the U.S. Congress does not need to ratify the agreement, leaving room for potential changes under a new administration.

The latest SMA talks began in April, earlier than usual, and concluded before the U.S. elections — widely regarded as a strategy to mitigate the so-called "Trump risk."

During his term, Trump demanded that Seoul increase its share of defense costs from $900 million to $5 billion, straining the bilateral alliance and delaying the signing of a renewed deal.

Earlier this year, the Republican candidate said Korea, as a "wealthy nation," should pay more for the stationing of USFK forces, and his aides have been calling on the Asian nation to increase its defense spending.

United States Forces Korea troops march during a military parade in central Seoul, Tuesday, to mark the 76th Armed Forces Day. Yonhap