The Korea-U.S. tariff negotiations turned on as U.S. President Donald Trump mentioned "upfront" in relation to the 350 billion dollars (about 492 trillion won) that South Korea decided to invest in the U.S.
President Trump signed an executive order on the purchase plan of TikTok's U.S. business at the White House on the 25th (local time) and said, "As you know, we are doing very well in trade negotiations," adding, "We are also working well with China and other countries."
"With tariffs and the signing of the agreement, we have secured 950 billion dollars in just one case," he said. "As you know, Japan has 550 billion dollars and Korea has 350 billion dollars. This is an amount that we receive as upfront." The 950 billion dollars mentioned is presumed to be an example of the European Union.
In July, President Trump mentioned 'pay in advance'. On July 24, President Trump said, "Japan gave 550 billion U.S. dollars in advance to lower tariffs," while explaining the trade agreement with Japan. "It's not like a loan, it's a 'signing bonus.'
Currently, South Korea and the United States are in a tug-of-war over whether it is a large-scale cash investment, a large loan, or a guarantee in relation to the formation of a $350 billion investment fund in the U.S.
The 350 billion dollars that Korea has decided to invest in the U.S. amounts to about 20% of Korea's gross domestic product. The Korean government believes that the overall economy could falter if huge amounts of cash are injected at once, as requested by the U.S., and that it will minimize equity investment through cash, while investing most of it with loans and guarantees.
In addition, if the U.S. provides $350 billion in investment in the U.S., as requested by the U.S., South Korea will have to deal with significant foreign exchange risks, which calls for a currency swap between South Korea and the U.S. However, it strongly implied that even if a currency swap is signed, all of the $350 billion cannot be invested in cash.
On the other hand, the U.S. is forcing South Korea to make a "Japanese-style trade agreement." Just like Japan's agreement, the U.S. receives dollar cash through equity investment, and the U.S. decides where to invest and the U.S. takes 90 percent of the investment profits.
President Lee Jae-myung said in a Reuters interview released on the 22nd, "If the U.S. invests $350 billion in cash as required without currency swaps, South Korea will face the same situation as the 1997 financial crisis."
Investment in the U.S. is likely to rise further
The bigger problem is that there is a possibility that the investment in the U.S. will be increased, which is currently around $350 billion.
The Wall Street Journal reported on the 25th that "U.S. Commerce Secretary Howard Rutnick called for a slight increase in South Korea's investment in the U.S. from the previous $350 billion."
According to reports, Minister Rutnick is known to argue that South Korea should also accept much of the terms of the U.S.-Japan trade agreement, even if it is difficult for South Korea and Japan to invest the same amount ($550 billion).
In this regard, the Wall Street Journal reported, "The U.S. authorities are concerned that if South Korea signs a trade agreement with the U.S. on more relaxed terms than Japan, the non-legal U.S.-Japan agreement could be damaged."
"In response to Secretary Rutnick's demand, South Korean government officials are saying that the Trump administration continues to change its goals by seeking last-minute concessions on issues that the two sides have already reached verbal agreements," he added.
On the other hand, a White House official told the Wall Street Journal, "We are finely adjusting the agreement with South Korea, but we do not demand a 'dramatic departure' from what has already been agreed upon."
Their demands can only be seen as a violent infringement on our national sovereignty.
This is not the behavior of an ally, but rather the imperialistic conduct of a nation seeking to create a colony.
We have neither reason nor need to comply with such an agreement.
We may need to consider a complete halt to exports to the United States.
This is a war.
We stand at a crossroads—whether to lose our country or to defend it.
Actions that destabilize the current administration and pressure the government from their side
are no different from the treacherous acts of collaborators during the Japanese occupation.
This is a unilateral act of aggression that we must never accept,
and we must all resist together.
We must be prepared to abandon the United States if necessary.
- The claim that this is not a dramatic departure is itself proof that they are not honoring the agreement.
We must remember that the current situation stems from their breach of the accord.