South Korea Warns US Investment Demands Could Trigger Financial Crisis:
South Korean President Lee Jae Myung has issued a warning that the United States’ demand for a $350 billion investment in exchange for reduced tariffs could result in a liquidity crisis, potentially destabilizing South Korea’s fourth-largest economy in Asia. The deal, first announced by former US President Donald Trump in late July, is centered around significant tariff cuts on Korean exports, but it also demands that Seoul commit substantial financial resources to the US market. Such a move has raised concerns among South Korean officials, who fear that the sudden withdrawal of such a large sum from the country’s financial system would mirror the economic downturns of the past. The president emphasized that the current agreement requires urgent revisions to prevent systemic financial risks, highlighting the potential for broader economic instability.
The issue has sparked controversy beyond financial concerns, with South Korean Foreign Minister Cho Hyun also questioning the feasibility of the investment deal. The minister stated that Seoul must ensure visa issues are resolved before any substantial investments can begin, adding another layer of complexity to the agreement. In addition to financial considerations, the dispute reflects a growing strain in the US’s international trade relations, as the Trump administration continues to push for economic commitments from its trade partners, often under the threat of increased tariffs.
The agreement, announced by US President Donald Trump in late July, includes a sharp reduction in tariffs on Korean imports from 25% to 15%. In return, Seoul committed to major investments in the US and pledged to purchase $100 billion worth of American oil and gas, among other measures.
"Without a currency swap, if we were to withdraw $350 billion in the manner that the US is demanding and invest this all in cash in the US, South Korea would face a situation similar to the financial crisis it experienced in the past," Lee said on Monday in an interview with the news agency, stressing that the agreement requires urgent revision to avoid systemic risks.
Lee added that South Koreans were angered by what he described as the "harsh" treatment of workers after 300 Korean nationals were detained at a battery plant under construction in Georgia, following a major US immigration raid.
The feasibility of the investment package was also questioned by South Korean Foreign Minister Cho Hyun earlier this week. The minister stated that Seoul must ensure visa issues are resolved before any substantive investments can begin.
The dispute marks the latest sign of strain in Washington’s international trade ties. Under Trump’s revived economic agenda, the US has compelled several partners to commit to large-scale investments or imports under the threat of steep import tariffs.
In July, the European Union agreed to import $300 billion worth of American oil and gas a year for three years, a move that current and former EU officials have described as unrealistic and potentially harmful to European energy security.