TMTPOST -- The South Korean government is reported to consider the massive committed investments for a trade deal that will see 15% U.S. tariffs on the Asian economy, similar to one U.S. President Donald Trump announced with its neighbour Japan on Tuesday.
Credit：Xinhua News Agency
South Korea is exploring a proposal to invest at least $100 billion in the United States as part of trade talks with the Trump administration, Yonhap News Agency cited industry sources on Thursday.The proposed investment package would include potential commitments from major South Korean conglomerates, including Samsung Group, SK Group, Hyundai Motor Group, LG Group, POSCO Group and Hanwha Group., according to the sources.
The South Korean news media outlet suggested to Seoul could even expand the investment package to push for a deal ahead of Trump’s self-imposed deadline August 1. It reported that the proposed package could get bigger in value if it includes possible procurement by the government.
The report cied an industry official the South Korean government had directly contacted each of the top ten domestic conglomerates to know the potential size of their committed investment. Seoul is trying to put together a package that aligns with Trump's interests, like cooperation in the shipbuilding industry, even if the total investment falls short of Japan’s under the recent deal, said the official.
Another South Korean-based news media Asia Today echoed the $100 billion possible investment. It reported the government is preparing a multi-pronged strategy involving both public and private sectors to dip U.S. tariffs to 15%, instead of 25% Trump earlier this month threatened from August 1. And at the center of the efforts is a proposal for over $100 billion in local investment by South Korean companies.
Washington and Seoul have discussed creating a fund to invest in American projects as part of a trade deal, similar to that U.S. and Japan struck earlier this week, Bloomberg quoted people familiar with the matter on Thursday. The U.S.- South Korea talks are said to focus on reaching a 15% tariff rate, including the current auto levies, just like the U.S.-Japan deal dictates.
Though it is not clear the scope of the fund under discussion, the sources said the U.S. has been seeking pledges totaling hundreds of billions of dollars, adding that talks remains fluid. The deal may also require South Korea to pledge additional purchase of U.S. goods in key sectors, again echoing the Japan agreement.
Trump on Tuesday announced a “massive” trade deal with Japan, involving $550 billion in investments and a 15% reciprocal tariff on Japanese goods. The 15% tariff rate is not just lower than the 24% tariffs the Trump administration originally implemented in early April, but also lower than the 25% tariffs that Trump threatened the U.S. would charge on all of imports from Japan starting August 1.
Japanese Prime Minister Shigeru Ishiba on Wednesday confirmed the agreement to set tariffs at 15%, including the existing rate. He told reporters that the 15% rate was the lowest so far among countries that have a trade surplus with the U.S., thus “ we have achieved the greatest results.”
Details of a trade agreement released by the White House the $550 billion will be targeted toward the revitalization of semiconductor and other U.S. strategic industrial base. Japan will increase imports of U.S. rice by 75%, buy $8 billion in U.S. agricultural goods and U.S.-made commercial aircraft including 100 Boeing aircraft. Tokyo will also lift longstanding restrictions on U.S. cars and trucks.
U.S. Commerce Secretary Howard Lutnick on Thursday pointed squarely at across-the-sea competition with Japan as a catalyst for the South Koreans ahead of meetings with U.S. negotiators.
“You can hear the expletives out of Korea when they read the Japanese deal, because the Koreans and the Japanese, they stare at each other,” Lutnick told CNBC. “They were like, ‘Oh, man.’” “The Koreans, like the Europeans, very much want to make a deal,” he added.
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