US Korea Trade Talks Stall Over $350 Billion Investment Demand Amid Security Agreement Negotiations

Welcome to "South Korea Tariff News and Tracker." Today, we're focusing on the current state of tariff negotiations between South Korea and the United States. The talks have been complicated by the U.S. demand for a $350 billion investment from South Korea, which has stalled progress on trade agreements. South Korea is looking to categorize this investment into loans, guarantees, and investments, rather than a direct cash investment. Additionally, the Korean government is seeking currency swap-like safety measures to ensure exchange rate stability, which they believe are essential conditions for accepting the U.S. demands.

Despite these challenges, South Korea is pushing to announce security sector agreements first, which could include increased defense spending, purchases of U.S.-made weapons, and revisions to the South Korea-U.S. nuclear cooperation agreement. These security agreements are expected to be finalized before the Asia-Pacific Economic Cooperation summit later this month. According to a government official, broad agreement on the security sector has already been reached, but Seoul prefers to bundle these agreements with trade negotiations for a comprehensive package.

The U.S. has imposed significant tariffs on certain sectors, including steel and aluminum, which have not been reduced despite Korea's efforts. The auto tariffs remain at 25% for Korean automakers, placing them at a disadvantage compared to competitors like Japan and the EU. The recent U.S.-Japan trade agreement has further complicated Korea's bargaining position.

Meanwhile, South Korea's currency, the won, is under pressure due to a strong U.S. dollar and weak export growth. The currency has depreciated by about 6% over the past year, and forecasts suggest continued pressure in 2025.

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