As Trump presses for a $350 billion investment and a summit with Kim Jong Un, South Korea has pushed back, citing financial risks, public anger over a Hyundai ICE raid, and fears of being strong-armed.
US President Donald Trump is due to arrive in South Korea on Wednesday as part of his five-day tour of Asia, and has two clear priorities.
The first is for the South Korean government to finalize a $350 billion (€300 billion) investment package in the US and the second is to arrange another face-to-face meeting with North Korean leader Kim Jong Un.
After successful visits to Malaysia and Japan, where Trump inked beneficial trade and security deals, analysts say his maximalist ambitions from his visit to South Korea are likely to be more difficult to achieve.
The $350 billion deadlock
The South Korean administration of President Lee Jae-myung is standing its ground on the massive investment package that is being demanded in return for the reduction of US tariffs on Korean imports.
Officials in South Korea said the bulk of the $350 billion investment had been earmarked for loans and loan guarantees to South Korean companies setting up new facilities in the US.
Trump, however, wants Seoul to pay the total in cash or equity “up front.” Lee said that such a cash outlay would destabilize the country’s financial markets, putting the investment deal in doubt.
A cool South Korean welcome
Trump may not receive a warm welcome from the people of South Korea.
There have been several demonstrations outside the US embassy in central Seoul over the past few days. Some South Koreans even feel their nation is being strong-armed into trade deals and fear that Trump might once again threaten to withdraw US forces if his demands are not met.
There is still lingering resentment over a raid by US Immigration and Customs Enforcement (ICE) on a Hyundai plant in the US state of Georgia in September. Over 300 South Korean workers were detained before being returned to Seoul.
South Korea’s Foreign Minister Cho Hyun told reporters on Friday that since the ICE raid on the South Korean carmaker, Seoul and Washington have agreed to establish a working group to create a new visa category for future South Korean investment projects.
South Koreans question cost of US alliance
“For many South Koreans, the United States has long been regarded as the country’s most important security partner,” said Hyobin Lee, a professor at Sogang University in Seoul.
“However, under the Trump administration, there is a widespread perception that the alliance is being leveraged for unilateral economic gains.”
“The idea that South Korea must make large-scale investments simply to avoid being disadvantaged by US tariffs has been received by many as a sense of betrayal,” she told DW.
Washington and Seoul have said that they are narrowing their differences over the $350 billion investment package that the US is demanding in return for the US reducing tariffs from 25% at present to 15%.
In an interview with Bloomberg, Lee said that a number of sticking points remain, including the amount of the investment, the timeline, the method of investment and how the losses and profits will be shared.
“The US will of course try to maximize its interests, but it must not be to the extent that causes catastrophic consequences for South Korea,” Lee said.
