Trump says South Korea and Japan will pay billions ‘upfront’ in investment

SEOUL – US President Donald Trump insisted South Korea will provide billions of dollars in investments “upfront”, despite Seoul’s assertion that it would suffer a financial crisis if it met US demands without safeguards.

Mr Trump’s remarks contradict South Korea’s understanding of its trade deal with the US, a government official, speaking on condition of anonymity because of the sensitivity of the talks, told Reuters.

“We have never thought about making the investments in lump sum,” the South Korean official said, adding that Seoul and Tokyo intended to provide financing for projects only after a “capital call” made by the US.

In July, South Korea pledged US$350 billion (S$452.5 billion) towards US projects, but has

balked at US demands for control over the funds

and Seoul officials say talks to formalise their trade deal are at a deadlock.

Earlier in September, Mr Trump formalised a trade deal with Japan, lowering tariffs on Japanese automobile imports and other products in return for US$550 billion of Japanese investment in US projects, and US officials have pressed Seoul to follow suit.

“We have in Japan it’s $550 billion, South Korea’s $350 billion. That’s upfront,” Mr Trump told reporters on Sept 25 in the Oval Office as he touted the amount of money he said his sweeping tariffs have brought in.

Mr Trump’s comments came as political doubts have increasingly dogged his trade talks with South Korea, spooking investors who now worry Seoul may end up with a raw deal or perhaps none at all.

Both Japan and South Korea have said they will make investments based on US projects, rather than paying the total of US$900 billion upfront.

A memorandum of understanding on Japan’s US$550 billion investment agreed with the US in September also made no mention of an “upfront” payment of the funds.

It stated that the investments should be made ‘from time to time’ until the end of Mr Trump’s term in January 2029. Under its deal, Tokyo agreed to transfer money within 45 days after the US selected a project.

Japanese officials did not comment on Mr Trump’s “upfront” remarks on Sept 26.

South Korea has also said it cannot afford to make large cash investments. President Lee Jae Myung told Reuters last week that without safeguards such as a currency swap, South Korea’s economy could be plunged into crisis.

One South Korean government official said there was no comment on Mr Trump’s remarks, but reiterated that Seoul’s stance remains that it would negotiate with the US under the principle that the deal should meet national interests and be commercially feasible.

Analysts say a currency swap is unlikely, and South Korean negotiators are pushing for most of the funds to be in the forms of loans rather than direct investment. They are also pressing Washington for mechanisms to ensure the projects are commercially viable. REUTERS