The Trump administration is said to be deeply dissatisfied with the delay in South Korea’s implementation of its $350 billion investment pledge to the United States.
Politico, citing sources familiar with the Korea-U.S. investment negotiations, reported on the 17th (local time) that the talks were proceeding more slowly than Trump administration officials had expected and remained unresolved. The sources described South Korea as “the slowest negotiators ever.”
South Korea and the United States reached a trade agreement last July under which Seoul would invest $350 billion in the U.S. The deadline for implementation is January 2029. Politico noted that South Korea has still not finalized a single project.
◆ Japan has finalized six projects, while South Korea has none yet
The country Washington is using as a benchmark is Japan. After pledging $550 billion in investment, Japan has finalized and announced six projects. Over the same period, South Korea has finalized no projects.
At an event last month marking the opening of the Korea-U.S. Shipbuilding Cooperation Center (KUSPC) in Washington, D.C., U.S. Commerce Secretary Howard Lutnick said, “We will judge by the number of ships built, not by words or memorandums of understanding (MOUs).” An MOU refers to a nonbinding promise. The remark was interpreted as pressure to deliver tangible results rather than signing ceremonies or announcements.
There were also domestic circumstances on the Korean side. Early this year, President Trump warned that tariffs on South Korea would be raised from 15 percent to 25 percent because the National Assembly’s passage of a special law for U.S. investment was delayed. He did not follow through on that threat, and the law supporting the investment was passed in a plenary session of the National Assembly in March. The legal foundation has been established, but it has not yet led to the finalization of individual projects.
◆ Has investment frustration spilled over into security?
Sources said that broad dissatisfaction in the economic sphere also played a role in President Trump’s decision the previous day to order a reduction in Korea-U.S. joint military exercises. Some interpret the delayed investment implementation and the treatment of Coupang and others as factors in the decision.
Politico analyzed this as showing “the tendency to treat the economic and security relationship with the other country as one,” adding that “frustration in one area spills over into assessments of another.” In other words, trade issues do not remain at the trade table but are linked to military and diplomatic matters.
Minister of Trade, Industry and Energy Kim Jung-kwan and Secretary Lutnick met on the 17th to discuss the U.S. investment issue.
◆ With 2 years and 5 months left, what are the options?
There are a little over two years and five months left until the deadline. To honor the $350 billion pledge, South Korea must finalize a series of large-scale projects.
To dispel the label of “the slowest negotiators,” visible results must come first. The shipbuilding sector, which Secretary Lutnick cited as a benchmark, is being discussed as a card Korea can use because it can show results relatively quickly through ship construction.
The negotiation structure that places economics and security at the same table is another variable. Since the delayed investment issue has spilled over into a security matter involving a reduction in joint exercises, there are calls for the response to be carried out not just by trade authorities but at the whole-of-government level.
How and when South Korea finalizes projects during the remaining period is expected to affect the broader Korea-U.S. relationship.