The White House and South Korean government continue to haggle over the details of Seoul’s $350 billion investment commitment.
The United States and South Korea still can’t agree on a key plank of the tentative trade agreement they inked over the summer, despite U.S. pressure to finalize the deal during President Donald Trump’s visit to the country Wednesday.
Seoul is bridling over Trump’s insistence that South Korea pony up $350 billion in an “upfront” payment to the U.S. government as part of the investments it promised in July. South Korean officials have warned that doing so would crater their economy and potentially destabilize the value of their currency, the won. According to three people in touch with the South Korean and U.S. negotiators, the Trump administration is now considering softening some of its initial demands for the investment.
“The details of the investment is the major stumbling block,” said one person familiar with U.S.-South Korean trade talks, who was granted anonymity to share sensitive details. “It’s not been decided what the sources of those funds will be — whether it includes loans or loan guarantees — and the process for investment project selection and profit sharing.”
It’s a sign of the challenges the administration faces turning a series of eye-popping foreign investment pledges into reality.
In addition to South Korea, Japan and the European Union have promised to invest hundreds of billions of dollars in the United States in exchange for lower tariff rates, but they chafed over some of the initial terms for spending the money that Trump and his top officials demanded. Any leeway the president may grant South Korea in fulfilling its investment pledge will likely set a precedent for other countries pursuing trade negotiations with the U.S.
Treasury Secretary Scott Bessent acknowledged Monday that the deal is unlikely to be finalized during Trump’s nearly weeklong trip to Asia.
“[There’s] just a lot of details to work out,” Bessent told reporters on Air Force One en route from Kuala Lumpur to Tokyo. “It’s a very complicated deal and I think we’re very close.”
A White House spokesperson declined to comment on the state of the negotiations. South Korea’s Ministry of Foreign Affairs did not respond to a request for comment.
The president and some of his top economic officials raised expectations earlier this month that both sides could finalize the handshake agreement they struck in July ahead of a Wednesday sit-down with President Lee Jae Myung. Speaking to reporters Friday, Trump claimed the agreement was “pretty close to being finalized” and said he was “ready” to fill in the details from the framework outlined this summer, if Seoul was, too.
But Lee, who was elected in June, has been resisting Trump administration demands that Seoul commit to funding the full $350 billion it pledged with a one-time payment from government coffers and grant the White House broad control over how to invest it — along the lines of a $550 billion investment deal Trump reached with Japan. Korean officials have also grumbled that relative to the size of their economy, their investment pledge is a far greater burden than Japan’s.
“South Korea will deliver on its commitment, but the U.S. should recognize that Korea’s economy is much smaller than Japan’s,” a person familiar with U.S.-South Korean trade talks said on condition of anonymity due to the sensitivity of those discussions.
The Bank of Korea sees roughly $20 billion a year in upfront payments as the maximum Seoul can provide without destabilizing its currency market. Seoul also requested a currency swap line, but that request was denied by the U.S. Federal Reserve, said the three people who were briefed on updates by the South Korean government.
The U.S. has, however, offered a proposal to accept investments in South Korea’s currency, which was viewed by South Korean leadership as a step toward flexibility, the three people said.
South Korean Finance Minister Koo Yun-cheol said in an interview last week with Bloomberg TV that the U.S. understands that “due to the current state of Korea’s foreign exchange market, we cannot pay upfront.”
South Korea has pushed for a mix of direct investments, loans, loan guarantees and other financial safeguards to spread payments over a longer timeline.
“Negotiators appear to be converging on greater financing flexibility,” said one of the people close to both the U.S. and South Korean negotiators. “Project selection criteria and the investment timeline remain unresolved.”
The two countries have also been negotiating to create a path for highly skilled workers to enter the U.S. to establish new manufacturing plants funded by Korean investors, after U.S. immigration officials staged a September raid at a Hyundai plant in Georgia and detained about 475 people, mostly South Korean nationals.
While the two sides have committed to finding a system to ease the visa process, the raids have caused consternation among South Korean businesses wary of the Trump administration’s hard-line immigration policies and the difficulties they could create for foreign companies looking to set up new facilities.
“In my discussions with Korean conglomerates, the chaebols, they’re saying, ‘You want our money, you want our investment, but we need to be able to send our experts in and out to make sure that these plants are set up properly and that they can achieve the goals that we’ve set for them,’” said Tami Overby, a partner at DGA Group Government Relations. “The video of 317 hard-working, rule-following Koreans [being arrested] is still uppermost in many people’s minds. And it did not leave a good taste in their mouth.”
Trump on Monday acknowledged the concerns.
”This is not just South Korea,” Trump told reporters aboard Air Force One. “We have a lot of factories being built by outside, by foreign interests. When they come in, some of these factories make very, very complex, very highly sophisticated equipment. They’ve gotta bring people in with them for a period of time, and they’ll teach our people how to do it.”
And he promised “a whole new plan” for providing visas for those foreign workers.
“As President Trump has made clear, the Administration will work with any company investing in the United States by slashing regulations and enabling companies to bring in technical experts to set up facilities and train up American workers,” White House spokesperson Kush Desai said in a statement to POLITICO. “Industry leaders in sectors ranging from autos to pharmaceuticals to technology have committed to investing trillions in the United States because they know they have a friend and ally in the White House.”
Trump officials, however, continue to haggle with South Korea’s government over the issue of high-skilled visas for their companies to bring over workers to U.S.-based facilities. “The U.S. and South Koreans have had two meetings on resolving the visa issue, but there is still no agreement — more meetings are needed” said a person familiar with those discussions granted anonymity due to their sensitivity.
Meanwhile, South Korean corporations with investments in the U.S. are reluctant to dispatch workers needed for those projects due to fears those employees may end up as targets of U.S. Immigration and Customs Enforcement raids, that person added.
Overby, however, reiterated that Korean companies still want to invest in the United States.
“Everybody needs to be realistic now. Korean companies were investing in the U.S. before these tariffs,” she said. “The U.S. is the world’s largest market. It’s a good market. They do well here.”