South Korea faces U.S. pressure on investment fund

U.S. President Donald Trump reiterated that South Korea’s investment in the United States amounts to $350 billion, describing it as “up front.” He is effectively demanding that South Korea deposit the entire sum agreed upon in July into a U.S.-managed fund in cash immediately. His remarks come amid stalled follow-up discussions on South Korea-U.S. tariff negotiations. Because the amount represents roughly 84% of South Korea’s foreign reserves, making such a short-term cash transfer is virtually impossible, increasing the likelihood of prolonged negotiations.

On Sept. 25, Trump said, “Japan provides $550 billion, South Korea $350 billion,” emphasizing that the investment is to be made “up front.” If the Trump administration designates specific projects and amounts, South Korea is being pressured to quickly accept conditions similar to Japan, which signed a memorandum of understanding (MOU) to transfer funds in cash within 45 days. The Wall Street Journal reported the same day that U.S. Commerce Secretary Gina Raimondo requested South Korea increase the investment amount.

The South Korean government says it is frustrated because U.S. demands differ from the agreement reached in late July. According to a memo prepared by the South Korean negotiation team, most of the fund would be provided through loans and guarantees, with only a portion directly invested. However, the MOU draft later sent by the U.S. placed much greater emphasis on direct investment. The South Korean government recently requested an “unlimited currency swap” with the U.S. as a precondition, citing concerns that a massive short-term cash outflow could create a foreign currency liquidity crisis.

The Trump administration has consistently imposed high tariffs unilaterally on other countries, using reductions as leverage to press unreasonable demands, often changing its position as needed. Demanding that South Korea make an investment comparable to Japan, which has a far larger economy and foreign reserves, is excessive. Requiring South Korea to provide over 70% of its annual budget in cash upfront, with the possibility of further increases, creates intense pressure. South Korea must assert its interests and respond decisively to avoid being undermined by the U.S.’s changing demands.