Crisis Management for a Conflict with North Korea

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한미 관세협상 후속 합의 '문턱'…3500억불 선불 투자 이견 좁히나

The Hurdle of Post-Korea-US Tariff Negotiation Agreement… Will the $350 Billion Prepayment Investment Disagreement Be Narrowed

Newsis | Local Language | News | Oct. 20, 2025 | Geopolitical Conflict and Disputes

South Korean and U.S. officials continue to negotiate over the $350 billion U.S. investment package linked to tariff agreements, with significant disagreements remaining over the form and method of payment. The U.S. government, led by President Donald Trump, insists on an upfront cash payment and a higher proportion of direct investment, while South Korea proposes a structure with approximately 5% direct investment supplemented by equity contributions, loans, and guarantees. Deputy Prime Minister Koo Yoon-chul indicated an increased possibility of blocking the upfront payment demand after discussions with U.S. Treasury Secretary Scott Bessent.

Recent talks included a two-hour meeting between South Korea's Minister of Trade, Industry and Energy Kim Jeong-gwan and U.S. Secretary of Commerce Howard Lutnick, alongside involvement from key economic figures such as Policy Chief Kim Yong-beom and Deputy Prime Minister Koo Yoon-chul. The talks aim to resolve stalled follow-up tariff negotiations after initial agreements in August, where rates on Korean auto tariffs were reduced to 15%, but the delayed finalization means a 25% tariff still applies, affecting South Korean exports.

South Korea's exports to the U.S. declined 1.4% in September 2025, continuing a downward trend amid the ongoing tariff tensions. The pressured trade environment stems partly from the delayed tariff reductions and competition from Japan and the European Union, which have completed their negotiations. Meanwhile, China is applying pressure on South Korea through sanctions related to the "MASGA" policy, targeting U.S. subsidiaries of Hanwha Ocean. The U.S. condemned these sanctions as interference in cooperation efforts between the U.S. and South Korea.

Expectations are growing that the tariff negotiations and related investment package agreement could be finalized around the APEC summit scheduled at the end of October 2025 in Gyeongju, South Korea. President Trump is expected to visit Korea during the summit, providing a potential opportunity for a presidential-level signing ceremony. South Korean officials emphasize balancing national interests and public understanding in finalizing the deal, while experts anticipate continued hardline U.S. stances alongside some administrative backing for mediation efforts.

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