South Korea is closing in on a trade deal with the United States that could be finalized before the Asia-Pacific Economic Cooperation (APEC) summit kicks off in Gyeongju later this month.
According to Kim Yong-beom, Seoul’s chief policy advisor, talks have “moved past most issues,” though a few sticking points still need attention. Kim shared this after returning from Washington, where he held meetings with U.S. Commerce Secretary Howard Lutnick and senior economic officials.
Both sides, Kim said, now expect “real progress” before their presidents meet on the sidelines of the summit.
The sense of optimism follows months of gridlock. President Donald Trump earlier said Washington agreed to cut import tariffs on South Korean goods to 15%, provided Seoul commits to $350 billion in U.S. investments.
The announcement, made on July 30, marked a breakthrough in strained negotiations, but auto tariffs remain intact as the two sides continue to argue over how the investment will be structured and delivered.
Korea delegation pushes to finalize $350 billion investment deal
A South Korean delegation led by Kim Yong-beom, Industry Minister Kim Jung-kwan, Finance Minister Koo Yun-cheol, and Trade Minister Yeo Han-koo arrived in Washington last week to lock down the details of that $350 billion commitment.
Seoul insists the amount will mostly come in the form of loans and guarantees, not direct capital transfers, to avoid heavy disruption in the foreign exchange market. Trump, on the other hand, had declared that the payment would be made “upfront.”
Kim confirmed both sides were narrowing differences, saying Washington now understands Seoul’s currency concerns. Treasury Secretary Scott Bessent also told reporters that the countries were “very close” to an agreement and expected an announcement “within 10 days.”
Over the weekend, Trump hosted business leaders from Korea, Japan, and Taiwan for a golf outing at Mar-a-Lago, reportedly arranged by SoftBank’s Masayoshi Son. The group included top executives from Samsung, SK, and Hyundai Motor, all of whom have a direct stake in how this trade pact unfolds.
Seoul’s biggest concern is about financial stability. A $350 billion outflow, officials warn, equals about 84% of Korea’s foreign exchange reserves. To cushion the impact, Seoul initially requested a dollar-swap deal, which Washington rejected.
New funding structure aims to protect Korea’s reserves
Economist Hur Jung from Sogang University said the two nations have “reportedly found a way to avoid depleting Korea’s reserves by allowing Seoul to invest using its own currency.”
Under the plan, Seoul would issue won-denominated government bonds to raise the $350 billion, then use those proceeds to fund projects in the U.S. Hur, however, warned that such a move, roughly 500 trillion won in one go, could burden taxpayers and push up domestic bond yields.
“It’s crucial for Seoul to roll out the investment in stages,” Hur said, stressing that doing it gradually would “minimize liquidity pressure.” But he cautioned that Washington could still push for a deal giving the U.S. a larger share of profits in return for easing currency rules.
A report by the Dong-A Ilbo newspaper added that Washington recently floated a new plan to reduce the shock from the massive package.
According to a government source, “there are alternative approaches being discussed that would cause less strain on our dollar reserves, such as creating accounts that allow investments in the U.S. using Korean won.”
Analysts say this would work like a soft currency swap, without requiring Federal Reserve approval. Seoul could buy U.S. government bonds with won, use those bonds as collateral for dollar loans, and then fund its investment commitments.
Other proposals on the table include issuing dollar-denominated Foreign Exchange Stabilization Bonds or creating a special purpose vehicle backed by foreign reserves.
Critics warn these options might inflate national debt or erode reserve stability in the long term. Nah Won-jun, an economics professor at Kyungpook National University, said Seoul should consider accepting higher US tariffs instead of transferring massive sums, whether in won or dollars, to America.
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