Kim Jung-kwan, the South Korean minister of commerce, business and assets, delivers a briefing on Nov. 14, 2025, alongside Minister for Commerce Yeo Han-koo (proper) on the small print of the very fact sheet and memorandum of understanding between the US and Korea on tariffs. (Yonhap)
South Korea and the US have signed a memorandum of understanding regarding Korea’s strategic funding of US$350 billion within the US, in line with Seoul on Friday.
The announcement comes on the heels of the joint truth sheet launched Friday outlining the agreements on tariffs and safety between the 2 nations.
The MOU, signed by South Korean Minister of Trade, Commerce and Sources Kim Jung-kwan and US Secretary of Commerce Howard Lutnick, stipulates that the US$200 billion of the funding bundle can be made in annual money installments capped at US$20 billion.
Korea’s funding commitments will likely be made earlier than January 2029, the tip of US President Donald Trump’s time period. In impact, Korea should commit as much as US$200 billion in investments within the US within the three years that stay of Trump’s time period, whereas the precise implementation of the investments, capped annually, will proceed to be carried out after Trump leaves workplace as effectively.
The US commerce secretary will chair an funding committee, which is able to seek the advice of with a session committee led by the Korean minister of commerce, business and assets on potential investments earlier than recommending them to the US president, who will make the ultimate name.
Income will likely be divided 50:50 till the principal is recouped, after which level the US will take 90% of the income.
The MOU states that after the US selects the locations for funding, Korea has 45 enterprise days to switch the required quantity in US {dollars} to accounts chosen by the US. Whereas Korea might refuse to abide, this could outcome within the US president imposing a tariff fee of his selecting. If the US doesn’t obtain the investments, the reciprocal tariff fee of 15% and the tariff fee on vehicles, which was lowered from 25% to fifteen%, will likely be raised.
The majority of the settlement is reportedly similar to what Seoul introduced following the US-South Korea summit final month.
South Korea’s Lee Jae Myung administration introduced beforehand that it had arrange extra strong security mechanisms for the restoration of the funding principal in comparison with the MOU signed by Japan.
The primary clause of the MOU states that the joint funding committee will solely suggest investments that it deems “commercially cheap” to the US president, indicating that it’ll scale back the potential for unprofitable investments.
Seoul’s Ministry of Commerce, Trade and Sources agreed to kind a particular function car (SPV) for the funding. In contrast to the Japanese deal, which created an SPV for every particular person funding, South Korea will create an “umbrella-type” SPV in order that if a loss is incurred in a single space, one other could be adjusted to compensate.
“If recovering the funding principal seems tough, we are going to elevate our proportion of the income and improve the possibilities of redemption,” the ministry introduced.
Seoul careworn that the settlement prioritizes Korean corporations in terms of choosing suppliers for the investments within the US.
“We set the foundations for Korean corporations to develop within the US market,” the ministry introduced.
“For the funding initiatives, we obtained [the US] to supply tangible and intangible help, equivalent to favorable situations and fast-track rules in terms of leasing federal land and securing contracts for water and electrical energy and different provides,” they added.
“The US agreed to prioritize Korean corporations and to rent managers advisable by Korea, increasing US enterprise alternatives for Korean corporations.”
The Ministry of Commerce, Trade and Sources reiterated its announcement that among the many US$350 billion slotted for funding within the US, US$150 billion will likely be dedicated to the shipbuilding business. Beneath the association, Korean corporations will provide direct investments, put up ensures for these investments, and spend money on transport finance.
Relating to the US$150 billion put up by Korean corporations, the ministry careworn that income from these investments won’t be shared with the US. Investments in shipbuilding won’t be subjected to profit-sharing phrases, and all ensuing income will likely be returned to Korean corporations.
“We alleviated uncertainties round our exports to the US and our financial system,” Commerce, Trade and Sources Minister Kim Jung-kwan mentioned relating to the MOU signing. “We arrange a mechanism for enhancing our possibilities of securing the funding principal primarily based on concerns of economic viability.”
“I believe the most important achievement of the settlement is the annual funding cap of US$20 billion,” Kim mentioned.
Nevertheless, as is the case with Japan, the ultimate determination about the place the investments go lies with the US President Donald Trump and the US authorities, that means that it’s nonetheless unclear how commercially viable they are going to be and to what diploma administration of the funds will likely be useful for Korean corporations.
Whereas the settlement states that the US will “seek the advice of” Korea relating to the place the investments go, Washington doesn’t require Seoul’s approval. The US$150 billion earmarked for shipbuilding will want a degree of approval from the Korean facet, however the US nonetheless decides the place the investments go and obliges a certain quantity of help from the Korean authorities.
The US will take half the funding income earlier than the principal is recovered with out investing any of its personal cash, and if South Korea fails to speculate the quantity demanded by the US, the US will take extra of the income of what has been invested. These are phrases that may very well be seen as poisonous clauses for Korea.
By Lee Bon-young, senior workers author
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