Hyundai vehicles at a port in Ulsan, South Korea. Photographer: SeongJoon Cho/Bloomberg
The U.S. and South Korea have discussed creating a fund to invest in American projects as part of a trade deal, similar to an agreement Japan struck with President Donald Trump on Tuesday, people familiar with the matter said. The scope of the discussions was not immediately clear, but the United States has been seeking pledges totaling hundreds of billions of dollars. The talks remain fluid, the people said, speaking on condition of anonymity to discuss details of the negotiations.
In Japan’s deal, the country agreed to backstop a $550 billion investment fund in exchange for Trump dropping a threatened 25 percent tariff to 15 percent. The discount applies to automobiles, an important export for the Asian country’s economy.
South Korea’s talks are similarly focused on reaching a 15 percent tariff rate, including for autos, one of the people said. The deal may also include a pledge by South Korea to purchase more goods in key sectors, one of the people said, again echoing the Japan pact, which included an agreement to purchase Boeing Co. planes and U.S. agricultural products.
The White House declined to comment. The South Korean trade ministry also declined to comment.
Commerce Secretary Howard Lutnick said he would meet with South Korean officials today. In a CNBC interview, Lutnick argued Tokyo’s agreement put pressure on Seoul to accept similar terms. “You could hear the expletives out of Korea when they read the Japanese deal,” Lutnick said. “The Koreans, like the Europeans, very much want to make a deal.”
Trump has threatened to impose a higher general tariff of 25 percent for Korean goods entering the United States, in addition to the existing levies on vehicles, vehicle parts, and steel, which are already straining ties between Seoul and Washington. A Korean trade delegation is in Washington this week for talks, according to the Asian nation’s finance ministry, and Trade Minister Yeo Han-koo is set to meet with U.S. Trade Representative Jamieson Greer as part of those discussions. However, a planned “2+2” dialogue that was scheduled for July 25 with Yeo and Finance Minister Koo Yoon-cheol alongside Greer and Treasury Secretary Scott Bessent was postponed and will be rescheduled, the Korean side said.
Lutnick has suggested a $400 billion figure in talks with South Korea, one of the people said. Lutnick presented that same number to Trump as part of talks with Japan, but the U.S. president eventually negotiated the fund up to $550 billion.
South Korea is preparing to propose at least $100 billion in U.S. investment pledges, Yonhap News reported, citing unidentified sources. It has secured those funds through consultations with the nation’s conglomerates, including Samsung Electronics Co., SK, Hyundai Motor Co., and LG Electronics Inc. The fund might grow if government support is added. Seoul had planned to unveil a $100 billion offer during the now-postponed July 25 talks, according to Yonhap. While smaller than Japan’s pledge, the amount reflects the fact that South Korea’s economy is less than half the size of Japan’s; matching the dollar value of the Japanese investment fund would present a significant challenge for Seoul.
Some South Korean companies have already made significant investment pledges in the United States. The chairman of Hyundai visited the White House in March to announce a $21 billion investment plan that includes an expansion of vehicle production in Georgia and a new steel plant in Louisiana.
The deal with Japan threatens to create a competitive advantage for that country’s automakers if Seoul is unable to reach a similar agreement. “This really puts a lot of pressure on South Korea. If they can get 15 percent [tariff rate], I’m sure they’d be thrilled, but they are in a different position than Japan,” said William Chou, deputy director of the Japan Chair at the Hudson Institute, a conservative think tank. That notion was echoed by the White House on Wednesday.
“We’re in a situation where, for example, German cars are going to be at a disadvantage now to Japanese cars, because it’s a 25 percent tariff on German. Same thing with Hyundais from South Korea,” White House trade adviser Peter Navarro said Wednesday on Bloomberg Television. Navarro said the Japanese deal was best interpreted as the president “doing a synergistic whole deal with the rest of the world.” He added, “This is just one part of that chess game.”
————————————————————
Copyright 2025 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.