Korean Government Prepares $100 Billion Investment Plan for Tariff Negotiations with the U.S.

The Korean government has established a $100 billion (approximately 137 trillion KRW) investment plan in collaboration with major domestic companies in anticipation of tariff negotiations with the United States.

This large-scale investment plan is set to be officially proposed to the U.S. government soon, with the current amount reflecting the investment plans of domestic companies and having the potential to increase in the future.

According to reports from the trade industry on the 24th, the Korean trade delegation planned to propose this investment plan to the U.S. side at the 'Korea-U.S. Senior-Level 2+2 Trade Consultation' scheduled for the 25th. However, the negotiations have been canceled due to an urgent schedule of U.S. Treasury Secretary Scott Vessen.

Domestic Conglomerate-Focused Investment Plan Compared to Japan's Example

In preparation for the tariff negotiations, the government has been actively communicating with domestic companies centered around the four major groups: Samsung, SK, Hyundai Motor, and LG.

It has been reported that approximately $100 billion in investment commitments have been secured so far, and since this is simply a tally of the companies' investment plans, the final amount may increase.

Japan, which has a similar industrial and export structure to Korea, previously proposed a $550 billion (approximately 757 trillion KRW) investment fund, resulting in a reduction of the mutual tariff that the U.S. had anticipated at 25% to 15%.

While $100 billion may seem insufficient compared to Japan's investment scale, it is considered a considerable amount in the business community, especially when taking into account that Japan’s economic scale is more than twice that of Korea.

According to the International Monetary Fund (IMF), Japan's nominal Gross Domestic Product (GDP) for this year is projected to be $4.19 trillion (approximately 5,741 trillion KRW), which is about 2.3 times that of Korea’s $1.79 trillion (approximately 2,452 trillion KRW).

Furthermore, the current amount only includes the companies' pure investment plans, and if government funding is added, the final proposed amount could further increase.

The government is reportedly considering the establishment of a separate investment fund based on Japan's case.

Expectations from the U.S. and Challenges for Korea

On this day, Bloomberg reported, citing sources, that "U.S. Commerce Secretary Howard Lutnick proposed the establishment of a $400 billion (approximately 548 trillion KRW) investment fund to Korea ahead of the tariff negotiations."

Bloomberg noted that "like Japan, the U.S. is focusing on setting a 15% tariff rate, including automobiles, in its tariff negotiations with Korea." It added, "It will be very difficult for Korea to promise economic support to the U.S. on the same scale as Japan."

The media assessed that "Japan's achievement in reaching a trade agreement with the U.S. to reduce tariff rates on automobiles and others to 15% has placed a significant burden on Korea."

Meanwhile, the Ministry of Economy and Finance explained that the '2+2 trade consultation' could not be held due to Secretary Scott Vessen's urgent schedule, stating, "The U.S. side proposed to hold it as soon as possible, and both Korea and the U.S. plan to set a schedule as quickly as possible."

Image sources: Export containers at Pyeongtaek Port on the 21st / News1, President Lee Jae-myung meeting with six economic organizations and business leaders on the 13th / Presidential Office, U.S. President Donald Trump / gettyimageskorea