Alliance at risk of becoming collateral as Washington ties defense to Seoul’s investment $350B package

The South Korea-U.S. alliance, long kept off the table even when the two sides clashed over trade, has effectively become collateral in their trade negotiations as fresh disputes cloud hopes for follow-up security talks.

Seoul's announcement of the first project under its $350 billion investment pledge to Washington had raised expectations that talks on the security portion of the joint fact sheet agreed to by the two countries' leaders would resume. But the Alaska liquefied natural gas (LNG) project, which U.S. President Donald Trump is pressing investment in, has since emerged as a new sticking point in trade talks, putting those hopes in doubt. The project is a plan to pipe natural gas from Alaska for export to Asia. Seoul has said it is reviewing the investment but has not committed to it.

For an alliance often described as one forged in blood, tying security to trade marks a break from tradition, as defense and deterrence have long been kept separate from economic disputes between the two countries.

The path to resuming security negotiations, including on South Korea's acquisition of nuclear-powered submarines, had only just opened with the investment announcement on Sept. 30.

On Friday, U.S. President Donald Trump stepped up pressure over the Alaska LNG project, which Seoul has said it would join only under certain conditions, saying he would “double it up” if Korea doesn’t commit $54 billion to the project.

The remarks came just after Foreign Minister Cho Hyun said progress on the investment had "created momentum" for security talks, undercutting that momentum almost as soon as it had been built.

U.S. Vice President JD Vance struck an optimistic note about the deal on Monday, saying the two sides needed to work out the details.

This is not the first time the two countries have clashed over trade, but in the past, defense and deterrence were handled separately. In November 2010, North Korea shelled Yeonpyeong Island in Gyeonggi shortly after supplementary negotiations on the South Korea-U.S. FTA broke down. U.S. President Barack Obama immediately reaffirmed Washington’s defense commitment. In 2008, when a dispute over U.S. beef imports put ratification of the FTA in doubt, the two countries made clear they would maintain their combined defense posture and cooperate on North Korea’s nuclear program.

This time, however, there are clear signs of trade friction spilling into the security alliance, and the presidential office’s security team has sounded strong warnings.

“The fallout from the collapse of tariff negotiations with the United States is also affecting follow-up discussions in the security area, including nuclear-powered submarines, uranium enrichment and spent nuclear fuel reprocessing,” National Security Adviser Wi Sung-lac said in February.

In August, a senior presidential official acknowledged that the United States had asked for an investment in semiconductors and said, “There are various pending issues between South Korea and the United States, and those issues affect one another and sometimes become obstacles.”

After the joint fact sheet was announced in November of last year, follow-up security talks stalled as legislation on the U.S. investment was delayed. The first round of talks finally took place in late May, but the second round was postponed when investment negotiations were delayed again.

The standoff has also affected defense readiness on the Korean Peninsula. On Trump’s orders, the Ulchi Freedom Shield — a regular joint military exercise between South Korea and the United States — in August was cut from the planned 11 days to five. Politico reported at the time that U.S. frustration over the pace of the $350 billion investment package played a role.

Under U.S. pressure, the South Korean government also broadened its review of sending troops to the Strait of Hormuz, which it had previously considered only after the war ended, to include dispatching military assets during the war. It recently slowed the process as public opposition grew at home.

Washington is also using security as leverage to reach into South Korea’s core strategic industries. Separately from the $350 billion investment, it continues to press Samsung Electronics and SK hynix to move memory chip production capacity to the United States.

“The core of the U.S. investment that the United States wants is memory semiconductor production facilities,” said a South Korean ruling party official. “This pressure is ongoing, and it is a question of what the companies decide.”

The pressure is not limited to investment. Republicans on the U.S. House Judiciary Committee called South Korea’s regulation of e-commerce giant Coupang under domestic law a “whole-of-government assault” on a U.S. company in July. More than 10 South Korean agencies have investigated Coupang, whose parent company is based in Seattle and listed in New York, since a leak of more than 30 million customer records in November of last year.

Washington is also watching South Korea’s regulation of Google and other U.S. platform companies. The Korea Fair Trade Commission began sanctions proceedings against Google in July over allegations that it limited competition from other app stores through exclusive deals with game developers. U.S. lawmakers have also criticized Seoul’s revised Act on Promotion of Information and Communications Network Utilization and Information Protection, which took effect in July and requires major platforms, including Google, Meta and X, to act against false and manipulated information. Republicans have called it a threat to free speech.

Critics say Trump's "transactional alliance" works less like a two-way deal than a one-way list of U.S. demands. In announcing the latest investment, Trump referred to the United States as "we" and Korea as "they," saying, "They will invest up to $200 billion."

"Even in briefings before summits, Trump reportedly looks first at how large the other country's trade surplus with the United States is," said one source. "It's a typical businessman's mindset."

Japan, which faces the same pressure, moved ahead of South Korea in carrying out its U.S. investment. After pledging $550 billion last year, it announced a series of large projects in February and March, and Japanese Prime Minister Sanae Takaichi put them front and center in her diplomacy with Trump.

She later publicly ruled out U.S. calls to send troops to the Strait of Hormuz, saying, “No decision on a dispatch has been made at all.”

“Japanese officials describe the U.S. investment as essentially official development assistance given to the United States,” said a South Korean government official who asked not to be named. “Their approach is to pay the cost first and secure leverage to use on other issues.”

The problem is that while trade and security have become hard to separate, the government's response remains divided. The investment pledge is led by the presidential policy office and the Trade Ministry, while security issues are handled by the National Security Office and the foreign and defense ministries. Information sharing between the policy and security teams was reportedly insufficient during the negotiations.

“We need a command center that can manage various economic and security issues together," said another source familiar with South Korea-U.S. relations. "If this pattern of trade disputes affecting security becomes entrenched, the alliance’s predictability could drop significantly.”

BY YOON JI-WON [[email protected]]