The president had been harping about South Korea not paying its fair share since the 2016 campaign, making this new agreement a clear victory for his policy of getting other nations to pay more for US force protection.
Seoul's negotiator, Chang Won-sam, and his United States counterpart, Timothy Betts, met in Seoul to ink the contract.
The compromise calls for South Korea to pay 1.0389 trillion won, or $920 million, this year to offset the cost of maintaining some 28,500 American troops, officials said.
The 8.2 percent figure marks the increase in South Korea's defense budget.
Last year, South Korea provided about $830 million, roughly 40 percent of the cost of the deployment of 28,500 US soldiers whose presence is meant to deter aggression from North Korea. The U.S. does not require approval from Congress. Park Ji-won, Arirang News. Also, the deal was originally going to be for five years, . but the US insisted on just one year.
The provisional contract, known as the Special Measures Agreement, was inked almost six weeks after the previous five-year accord expired. While negotiations began in March 2018, the two sides had been at odds over the duration of the agreement and the amount to be paid.
"I think at this point, we were able to close the gap on the total amount", she told the USA official.
President Moon Jae-in said on Monday that the second summit between the Democratic People's Republic of Korea (DPRK) and the United States will be a critical turning point for the complete denuclearization of the Korean Peninsula. "But it's an important part and we are pleased that our consultations resulted in an agreement that I think will strengthen transparency and strengthen and deepen our cooperation in the alliance".More news: US team in Beijing for trade talks
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For the renewal of the pact, Seoul had previously insisted that the costs to be borne by South Korea not exceed 1 trillion won and that the deal remain valid for three to five years.
South Korea signed a provisional agreement to pay around 1.04 trillion won this year for the stationing of U.S. Forces Korea (USFK) troops here, a rise of 8.2 percent year-on-year.
Over multiple rounds of talks held last year, the United States compromised on the amount, but the U.S. maintained that the deal should be valid for only a year. Ten rounds of negotiations were required over the span of a year to hammer out the new deal.
South Korea has shared the financial burden for USA troops since the early 1990s. But Seoul continued to reject that condition, saying it was not part of the deal's objective, and the United States side retracted the proposal. Seoul said they would pay $924 million this year compared to $830 million in recent years.
The deal - which must still be ratified by South Korea's National Assembly - resolves a dispute between the longtime allies at a crucial time, with a second U.S.
The two allies signed their first SMA in 1991, and the deal has been renewed intermittently since.
South Korea will expand its contribution in goods or services, instead of money, for construction and logistical support.
South Korea resisted increased spending but was concerned President Trump might put USA troop withdrawal on the table, or offer to scale back joint military exercises with the South even further, when he meets with North Korean dictator Kim Jong-un in Vietnam later this month - especially if the second Trump-Kim summit paves the way for a formal declaration of peace in the Korean War.