With $350B U.S. investment set to see daylight, new probe by Washington casts shadow on trade

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With $350B U.S. investment set to see daylight, new probe by Washington casts shadow on trade

Published: 12 Mar. 2026, 19:12

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

The National Assembly holds a plenary session in Yeouido, western Seoul, on March 12 to vote on a special bill on Korea's $350 billion investment pledge to the United States. [NEWS1]

Korea approved a special law on a $350 billion U.S. investment on Thursday, clearing the way for the pledge promised during tariff negotiations with Washington last year, removing the immediate threat of tariff hikes warned by U.S. President Donald Trump.

Still, uncertainty quickly resurfaced after the Office of the United States Trade Representative (USTR) on the same day announced that it would open a probe into Korea's potential unfair policies against the United States under Section 301 of its trade law which has no ceiling on tariff rates and sectors.

Korea’s National Assembly passed the so-called Special Act on Investment in the United States during a plenary session on Thursday with 242 lawmakers present, 226 voted in favor, eight opposed and eight abstained.

The law includes provisions to establish a new entity so-called the Korea-U.S. Strategic Investment Corporation, to oversee and implement the investment program. The passage comes about three and a half months after the two countries reached a consensus on $350 billion in investment in November in exchange for lowering tariffs from 25 percent to 15 percent.

$350 billion investment plan sealed
Under Korea’s plan, $150 billion will be dedicated to a shipbuilding project, while $200 billion will be invested in sectors aimed at strengthening the economic and national security interests of both countries.

The newly created entity will be launched with 2 trillion won ($1.5 billion) in capital fully funded by the government, while the timing and method of additional capital injections will be determined by presidential decree.

Investments will be capped at $20 billion per year, and any adjustments to the amount or timing must be made in consultation with the United States.

Investment targets will be selected jointly by the new entity and Korea’s Ministry of Trade, Industry and Resources, subject to final approval by a Korea–U.S. joint consultative committee composed of representatives from both countries.

Korea's Industry Minister Kim Jung-kwan, right, and U.S. Commerce Secretary Howard Lutnick take a photo after a tariff negotiation in Washington on Jan. 29. [MINISTRY OF TRADE, INDUSTRY AND RESOURCES]

“The passage of the special law establishes the institutional and legal foundation to implement the Korea–U.S. tariff agreement,” President Lee Jae Myung wrote on Facebook. “The government will also ensure that preparations and follow-up measures for implementing the law proceed without disruption.”

The government must submit an annual report to the National Assembly detailing the management and operation of the fund and report potential U.S. investment projects in advance. Investment information will be disclosed in principle, except in cases involving national security or corporate trade secrets.

The law also includes the creation of a risk management committee to oversee potential investment risks.

With the legislation now passed, the additional tariffs on Korean goods previously threatened by the Trump administration are expected to be withdrawn. Trump previously had warned that tariffs against Korea could be reset to 25 percent, citing its delay of the legislation.

Steel products are waiting to be exported at a port in Pyeongtaek, Gyeonggi, on March 12, when the U.S. government launched an investigation into Korea under Section 301 of its trade law. [YONHAP]

Energy poised to lead 1st project
Energy projects like liquefied natural gas (LNG) and nuclear power are widely expected to form the first tranche of Korea’s U.S. investment under the $350 billion framework.

While overseas investment decisions typically take time, projects could potentially be fast-tracked as early as this month amid looming pressure from Trump, especially after Japan already announced its large-scale first project in sectors of gas, oil and raw materials.

The most likely candidate is an LNG export terminal project in Louisiana, proposed by the U.S. government and valued at over $10 billion, which the Korean government is currently reviewing for feasibility.

The proposal is not necessarily unfavorable for Korea as securing long-term LNG supplies could help reduce Korea’s dependence on Middle Eastern energy imports. Korean shipbuilding and engineering could also benefit from joining the construction, while exports of steel and industrial equipment could provide additional economic gains.

Nuclear power and power grid infrastructure are also being considered as options, as the United States lacks construction capability despite Trump’s ambition to begin construction of 10 large nuclear power plants by 2030.

Numerous projects, including the HyperGrid power infrastructure project in Texas and a small modular reactor project in Michigan, are reportedly on the table.

The surge in electricity demand from expanding AI data centers will spur modernization of the aging power grid, another area of investment opportunity where Korea holds a competitive edge in high-voltage transmission technology.

“We will select projects where commercial rationality is guaranteed and ensure that the outcomes feed back into domestic investment and exports,” Industry Minister Kim Jung-kwan said.

U.S. President Donald Trump speaks at Verst Logistics in Hebron, Kentucky on March 11. [AP/YONHAP]

Another tariff threat — Again?
The USTR said Thursday it has launched an investigation against Korea under its Section 301 of the Trade Act of 1974 into what it described as “structural excess capacity and production” as a major unfair barrier that hinders U.S. growth.

The step appears to be an alternative measure to pressure countries after the Supreme Court of the United States ruled Trump’s reciprocal tariffs unconstitutional last month.

Sixteen economies were cited in the investigation, including Korea, China, Japan, the European Union, Taiwan and Vietnam — all major trading partners that run sizable surpluses with the United States.

“Evidence of structural excess capacity and production exists for Korea through large or persistent trade surpluses. Korea’s bilateral goods and services trade surplus with the United States increased to $56 billion over the course of 2024, and remained around $49 billion over the four quarters through June 2025,” the USTR said in a report.

“The Korean government has acknowledged the need to cut capacity in the petrochemicals sector.”

U.S. Trade Representative Jamieson Greer also said the United States could pursue additional investigations covering issues such as digital services taxes, pharmaceutical pricing, fisheries market access, rice market access and marine pollution.

Korea, however, emphasized that the probe is not aimed specifically at Korea.

“Section 301 is not targeting Korea,” Trade Minister Yeo Han-koo said during an emergency briefing on Thursday. “The concern is that many countries, including China, are exporting more than their domestic demand due to excess capacity, which is weakening the U.S. industrial base.”

“USTR did raised the concerns of Korea’s trade surplus, but we have fully explained that the surplus largely reflects exports of intermediate goods and parts tied to growing Korean manufacturing investment in the United States, and thus, ultimately contributing to the revival of U.S. manufacturing and to the broader American economy,” Yeo added.

Yeo also denied speculation that Washington opened the investigation because it viewed Korea’s recent probe into Coupang’s personal information leak as “unfair.”

“We also discussed the Coupang issue in our talks with Greer last week, and we strongly conveyed that we are conducting fair investigation for a data leak case affecting about 80 percent of Korean citizens," Yeo said.

BY SARAH CHEA [[email protected]]