(Bloomberg) — Donald Trump faces fresh hurdles in his push to secure major investment pledges from Asian allies, after South Korea said Washington’s terms were unrealistic and a contender to lead Japan’s ruling party hinted at the possibility of reviewing the agreement.
“We are not able to pay $350 billion in cash,” South Korea’s National Security Adviser Wi Sung-lac said in a Channel A News television interview on Saturday evening, referring to Seoul’s investment pledge with Washington. “It is objectively and realistically not a level we are able to handle.”
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“Our position is not a negotiating tactic,” he added.
Wi’s comments came after Trump described the investment pledges agreed by South Korea and Japan as “up front.”
Seoul and Washington agreed in July to a $350 billion investment pledge as part of a broader trade deal to lower US tariffs to 15% from 25%, but the two sides remain divided over how it should be structured. A similar pledge made by Japan worth $550 billion also remains unclear on the specifics of implementation, while the details that have emerged from the deal have alarmed officials in Seoul.
South Korea’s Prime Minister Kim Min-seok said in an interview with Bloomberg News last week that without a currency swap arrangement with the US, the investment could deliver a severe blow to the national economy. The sum of $350 billion is equivalent to more than 80% of South Korea’s foreign reserves.
Over the weekend there was also some caution expressed from Japan on their $550 billion US investment vehicle, with a top contender to lead Japan’s ruling party suggesting that a trade renegotiation with the US could be on the table if the deal doesn’t serve Japan’s interests.
“We must stand our ground if anything unfair that is not in Japan’s interests comes to light in the process of implementing the deal,” Sanae Takaichi said on Sunday with regard to the investment fund. “That includes a potential renegotiation.”
US Commerce Secretary Howard Lutnick has reportedly told South Korean officials that Washington prefers the investment in cash rather than loans.
Wi said the government is exploring alternatives and hopes for progress when the two leaders meet at the APEC Summit in Gyeongju next month.
Separately, Korea’s Finance Minister Koo Yun-cheol told reporters Saturday that he has concluded talks with the US on foreign exchange and will announce details soon. A presidential official later said Koo’s remarks are related to the US Treasury’s report on the currency policies of its major trading partners.