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Foreign Minister Cho Hyun shakes hands with National Assembly Speaker Woo Won-shik ahead of oral questioning before a plenary session of the National Assembly on Sept. 16, 2025. (Yonhap)

South Korea’s government suggested that its tariff negotiations with the US are in a stalemate because the US is demanding that it “follow Japan’s example” when it comes to the specific manner in which it invests the US$350 billion it pledged in July. 

During a National Assembly inquiry about the Lee Jae Myung administration’s diplomacy, unification, and national security policies, Democratic Party lawmaker Kim Young-bae asked Prime Minister Kim Min-seok what the main sticking point in the trade talks was. 

“Regarding the US$350 billion investment, the US fundamentally wants us to follow Japan’s example when it comes to the method of investment and the distribution of profits,” Kim responded. 

“However, the scale of our economy and other factors would make such an investment difficult, so we are trying to adjust things to a level that suits our circumstances,” he added. 

The US and Japan have reportedly signed an agreement whereby Japan makes investments in the US at the latter’s discretion. Once the US selects a project, Japan sends the cash within 45 days, and the US takes 90% of the profits after the principal is collected.  

The US and South Korea agreed in principle on July 30 to a deal that would lower US “reciprocal tariffs” on Korean goods from 25% to 15%, but the two sides have failed to reconcile disagreements over the concrete methods of the US$350 billion investment fund. 

The US is using the precedent set by Japan to pressure South Korea, but the Korean administration sees this pressure as a type of negotiation tactic. 

“The US is making that argument [that South Korea should follow Japan’s example], but those claims may be more for the sake of negotiation leverage, rather than being based on the sincere belief that such investments will happen,” Kim told lawmakers. 

US President Donald Trump has made reviving and rebuilding the American shipbuilding industry a key part of his platform. The Lee administration plans to utilize the critical role that South Korea can play in that ambition as its own negotiation leverage. 

Government officials also clarified that the choice not to sign an official trade agreement document ahead of the Korea-US summit in Washington on Aug. 25 was based on the national interest. 

“If we’d signed the agreement on the table at the time [of the bilateral meeting], the agreement contained worrying conditions that could have sent significant shocks through our economy,” said Foreign Minister Cho Hyun.

When a lawmaker noted that the Constitution requires that the National Assembly has the right to consent to the conclusion and ratification of agreements that will burden Korea with a major financial obligation, Cho said he agreed with this position. “We made that point very clear to the US,” he added. 

The administration also announced that it had requested an unlimited currency swap arrangement during its negotiations regarding investments in the US. When asked to confirm if Korea had made such a request, Cho replied, “I will tell you that it was one of the several proposals we put forth to them [the US].”

By Seo Young-ji, staff reporter

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