There is growing assessment that the government, which is conducting trade talks with the United States, has shifted from a "dove (moderate) camp" to a "hawk (hard-line) camp." After the arrest and detention of Korean workers in the U.S. state of Georgia, anti-Trump sentiment formed at home, and the government has begun in earnest a strategy to leverage that to secure practical gains.
During President Lee Jae-myung's trip to the United States for the U.N. General Assembly, the government made it clear that an unlimited currency swap is a necessary condition for a Korea-U.S. trade agreement. It also said that even if an unlimited currency swap is concluded, that would only put the parties at the starting line, and the $350 billion investment should be pursued on a mutually beneficial basis. A currency swap means depositing one's own currency and borrowing the counterparty's currency. Given Korea's foreign exchange reserves, it is impossible to put up $350 billion without a currency swap.
President Lee Jae-myung, who is visiting the United States, met with U.S. Treasury Secretary Scott Bessent on the 24th (local time) to discuss trade issues and ways to stabilize the foreign exchange market. At the meeting, Lee said, "Korea differs from Japan in terms of economic size and foreign exchange market infrastructure," and added, "Korea's particular circumstances must be fully considered."
At the meeting, Lee emphasized stabilizing the foreign exchange market and was said to have conveyed the need to conclude a Korea-U.S. currency swap. Following Lee, Vice Prime Minister and Minister of Economy and Finance Koo Yoon-cheol also met separately with Secretary Bessent to discuss the currency swap.
In Seoul, Prime Minister Kim Min-seok said in an interview with Bloomberg that "the agreed investment size between Korea and the United States exceeds 70% of Korea's foreign exchange reserves," and added that "without a currency swap agreement with the United States, the Korean economy could take a major hit," offering supporting fire.
Following the demand for a "currency swap" from the president and other top government officials, Presidential Chief of Staff for Policy Kim Yong-beom also chimed in. Kim said of the currency swap, "It is a necessary condition for the trade consultations that include a $350 billion investment plan in the United States, but it is not a sufficient condition." In other words, "The cash-flow investment the United States is asking for can begin to be discussed in a situation where an unlimited currency swap has been concluded. But concluding a currency swap does not mean we will immediately carry out the investment."
Kim explained that the sufficient condition for implementing the $350 billion investment is "commercial rationality, within the bounds permitted by domestic law, which the president emphasizes." In other words, if reciprocity that the public can accept is not secured, the government cannot sign the final agreement.
On top of that, Prime Minister Kim Min-seok set resolution of the visa issue—which recently led to the arrest and detention of Korean workers in the U.S. state of Georgia—as a precondition for a trade agreement. Kim said, "Without resolving the visa issue, matters cannot in effect move forward," adding, "The detention incident dealt a severe shock not only to the general public in Korea but also to the Korean workers detained there."
Regarding the remarks, the Prime Minister's Office later explained to the media that "it did not mean that investment in the United States would be put on hold," but there is interpretation that, along with Korea's discomfort over the visa issue, it indirectly conveyed the position that the issue must be resolved for smooth economic cooperation going forward.
An unlimited currency swap and resolution of the visa issue are cards that the Trump administration will find hard to accept and implement. In particular, in the case of a currency swap, the final decision rests with the Federal Reserve (Fed), an independent body beyond the Trump administration's influence in the United States. The visa issue is also directly connected to the Trump administration's political slogan "MAGA" (Make America Great Again), making it difficult to create a visa program that favors only Korea.
On this, an official at the domestic foreign exchange authority said, "President Lee and other senior government officials proposed a currency swap to Secretary Bessent and the U.S. administration, but everyone will know that the decision on this lies with the Fed," adding, "Recently, the Trump administration and the Fed have clashed sharply over 'independence.' It appears to be a strategic card that takes this U.S. situation into account."
There is also analysis that the government's strategy, which initially pushed Korea-U.S. trade talks as a "blitzkrieg" out of concern for export uncertainty and economic impact, has shifted to a "war of attrition." In fact, Deputy Minister Kim Yong-beom said regarding the future negotiation timeline, "The next important milestone is the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju."
A government source interpreted this by saying, "They cited a schedule that is still more than a month away as an 'important milestone,' which suggests they are preparing for prolonged trade negotiations."
Amid the delay strategy, U.S. President Donald Trump mentioned Korea's promise to make a $350 billion investment and said, "That is up front." There is interpretation that this again nailed down that the investment we proposed in the Korea-U.S. trade talks is a precondition for Korea's tariff cuts.
A former senior official at the foreign affairs and national security ministries, who requested anonymity, said, "The government's tone in trade talks with the United States changed drastically after the Georgia detention incident," adding, "The spread of anti-Trump sentiment at home due to the Georgia detention case has clearly become a lever."
The official said, "In the early days of the new administration, there were concerns about economic uncertainty, but as we entered a stable period, the view seems to have spread that there is no need to rush tariff negotiations," adding, "Although exports to the United States are declining, it appears the judgment that 'this level is bearable' is also reflected."
Shin Kak-soo, former Vice Minister of the Ministry of Foreign Affairs and Trade, said, "Right after the Korea-U.S. summit, the government said it was 'a deal so good a written agreement was unnecessary,' but as the talks drag on, the underlying reality is coming to light," adding, "It is risky to try to slip through trade negotiations that may require large Government Bonds issuance. Negotiations should be pursued squarely with the national interest at the center."