Following a previous announcement by Donald Trump, Seoul was expected to invest $350 billion in exchange for reduced tariffs.
South Korean President Lee Jae Myung cautioned Reuters that the $350 billion investment pledge, a condition of a bilateral trade agreement with the U.S., could lead to a significant liquidity crisis. According to Lee, this transaction poses a risk of destabilizing South Korea, the fourth-largest economy in Asia, and could potentially trigger a repeat of past regional economic collapses.
The agreement, revealed by U.S. President Donald Trump in late July, involves a substantial decrease in tariffs on Korean imports, from 25% to 15%. In return, Seoul committed to making substantial investments in the U.S., including a pledge to purchase $100 billion of American oil and gas, among other provisions.
”Lee stated in an interview with the news agency on Monday that without a currency swap, drawing $350 billion as demanded by the U.S. and investing it all in cash in the U.S. would put South Korea in a situation akin to its past financial crisis. He emphasized the need for urgent revision of the agreement to avert systemic risks.
Lee also mentioned that South Koreans were upset by what he characterized as the “harsh” treatment of Korean workers. This followed the detention of 300 Korean nationals at a battery plant under construction in Georgia after a major U.S. immigration raid.
Earlier in the week, South Korean Foreign Minister Cho Hyun also raised concerns about the feasibility of the investment package. He stated that Seoul needs assurances that visa issues will be resolved before any major investments can proceed.
This disagreement is the latest indication of tension in Washington’s international trade relationships. Under Trump’s renewed economic agenda, the U.S. has been pressuring various partners to commit to large-scale investments or imports under threat of high import tariffs.
In July, the European Union agreed to import $300 billion worth of American oil and gas annually for three years, a deal that current and former EU officials have described as unrealistic and potentially detrimental to European energy security.
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