Seoul-Washington declare deal, differ on details

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Seoul-Washington declare deal, differ on details

Published: 31 Jul. 2025, 17:22 Updated: 31 Jul. 2025, 17:25

Audio report: written by reporters, read by AI

Finance Minister Koo Yun-cheol speaks in a briefing held in Washington on Wednesday following the two countries’ agreement on tariff deal, which includes $350 billion Korean investment pledge in the United States. [MINISTRY OF ECONOMY AND FINANCE]

Korea and the United States reached a last-minute agreement on tariffs Wednesday, just two days before the negotiation deadline, but discrepancies emerged over the structure and returns of a proposed investment fund for U.S.-bound projects.

The situation mirrors what occurred after a July 22 trade deal between the United States and Japan, when both countries offered conflicting accounts of the actual scale of Japanese investment and the allocation of profits.

The unresolved discrepancies suggest that finalizing the joint statement will involve continued and potentially difficult negotiations.

In a social media post Wednesday, U.S. President Donald Trump announced the Korea-U.S. agreement, saying, “The Deal is that South Korea will give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself, as President.”

He also claimed that Korea additionally agreed to purchase $100 billion worth of U.S. energy products and would announce an additional major investment within two weeks, coinciding with President Lee Jae Myung’s planned visit to the White House.

President Donald Trump listens during a news conference with India's Prime Minister Narendra Modi in the East Room of the White House, Feb. 13, 2025, in Washington. [AP/YONHAP]

Trump: 'Korea to invest $350 billion-plus'

Korea’s total U.S. investment would amount to $350 billion and more, excluding the $100 billion in energy product purchases, according to Trump’s statement.

However, Korea’s negotiation team offered a different breakdown.

Deputy Prime Minister and Finance Minister Koo Yun-cheol told reporters that the $350 billion figure includes a $150 billion shipbuilding cooperation fund led by Korea, and a $200 billion financial package to support U.S.-based projects in strategic sectors such as semiconductors, nuclear energy, batteries and biotech.

Seoul: ‘Effective investment is $200 billion’

Industry Minister Kim Jung-kwan emphasized that the $150 billion shipbuilding fund is led by Korea, making its structure distinct from Japan’s. He said the joint Korea-U.S. investment fund for U.S. projects should effectively be considered $200 billion.

Kim made the comment in response to questions about whether Korea’s $350 billion investment was disproportionately large compared to Japan’s, given their respective economies.

Korea and Japan’s nominal GDPs in 2024 are $1.87 trillion and $4.03 trillion, respectively. Korea’s announced U.S. investment is $350 billion, 18.7 percent of its GDP, while Japan’s $550 billion is 13.7 percent, meaning Korea’s relative investment is 5 percentage points higher.

Director of National Policy Kim Yong-beom speaks during a press briefing on tariff negotiations at the presidential office in Yongsan, central Seoul on July 31. [YONHAP]

‘Not excessive if focusing on $200 billion’

“If Japan’s investment is 13 to 14 percent of GDP, then the equivalent for Korea would be about $230 billion,” said Minister Kim. “It’s more appropriate to compare the $200 billion joint package with Japan’s, rather than the headline figure of $350 billion.”

However, critics point out that Trump’s suggested additional investments may be coming, potentially making Korea’s contribution comparable or even greater than Japan’s.

“The Republic of Korea will provide $350 Billion for the United States to invest as President Trump directs, with 90% of the profits going to the American people,” said U.S. Commerce Secretary Howard Lutnick on social media platform X, showing differences that also emerged over how profits from the U.S.-bound investment fund would be shared.

Finance Minister Koo Yun-cheol, left, and U.S. Commerce Secretary Howard Lutnick discuss bilateral trade issues in Washington, D.C., on July 29, 2025 [MINISTRY OF ECONOMY AND FINANCE]

‘90% goes to U.S.’ vs. ‘Not finalized’

Lutnick also stated via X that reciprocal tariffs and auto tariffs between the countries would be set at 15 percent.

Minister Kim responded by saying that while Korea will retain control of the $150 billion shipbuilding fund, the $200 billion package would depend on further negotiations aligned with U.S. terms. He noted that “there are differences even between the United States and Japan over this so-called 90-10 profit-sharing rule” and added that Korea understands most of the U.S. share will be reinvested.

Presidential policy chief Kim Yong-beom echoed this view, saying in a press briefing that “we understand the U.S. portion of profits will be either reinvested or retained within the United States.” He added that since details about the fund’s structure, investor composition and profit allocation have not yet been finalized, “It’s premature to conclude that the United States will receive 90 percent.”

The conflicting interpretations of profit-sharing between Tokyo and Washington now appear to be repeating between Korea and the United States.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYOUNG-GU [[email protected]]