President Lee Jae-myung said that talks between the two countries remain deadlocked over the $350 billion in U.S.-bound investment, the core issue in the Korea-U.S. tariff negotiations. In an interview with Bloomberg published on the 26th local time, Lee said, "All of this — the investment method and amount, the timetable, how we will share losses and divide dividends — remains in dispute." Unlike President Donald Trump, who is seeking to conclude the negotiations during his Asia tour, the Korean government is prepared to accept an "APEC no deal" and a prolonged negotiation to minimize shocks to the foreign exchange market.
Talks with the United States are stalled over the share of cash direct equity investment by U.S.-bound investment funds and whether payments can be made in installments. According to the presidential office, the U.S. side abruptly demanded "mostly cash investment" after the late-July round of talks. By contrast, in response to Korea's repeated explanation that the shock to the foreign exchange market would be large, the U.S. side is said to have proposed cash investments of $25 billion each year for the next eight years. The Korean government, which initially wrote in a memorandum "mostly loans and guarantees, 5% direct investment," is adjusting to slightly increase the equity share while spreading payments over the long term. However, the position is that the U.S.-proposed "eight years, $25 billion" is difficult to accept given the impact on the domestic market.
President Trump is pressing to clinch a tariff deal during his visit to Korea for the APEC summit in Gyeongju on the 29th, but the presidential office said it is more likely the timing of a deal will be after APEC. Some observers say the two countries may produce a "fact sheet," a reference document short of a memorandum of understanding (MOU), to avoid a no deal. Last week as well, Presidential Chief of Staff for Policy Kim Yong-bum and Minister Kim Jung-kwan of the Ministry of Trade, Industry and Energy hurriedly departed for the United States for last-minute talks.
In recent talks, the message that "if the allied Korea suffers economic damage, it will also be a negative for the United States" was conveyed multiple times to the U.S. side, a presidential office official said. In the Bloomberg interview, Lee also said, "Of course the United States will try to maximize its own interests, but it should not be to the extent that it brings ruinous results to Korea." He added, "Dialogue is continuing and there are some differences in thinking, but a delay does not necessarily mean failure," and, "Because Korea is an ally and friend of the United States, we believe — and must — reach a reasonable outcome that everyone can accept."
The U.S. side is publicly sending a "deal imminent" message. On the 24th local time, as he set off on his Asia tour, President Trump said aboard his plane, "A deal is very close," adding, "If they are ready, I am ready." For Trump, who is visiting Korea, a domestic political card to show results on tariffs is also necessary. For this reason, foreign media reported that there is an intention to quickly wrap up talks with Korea during the visit and focus on negotiations with China, such as "restrictions on rare earth exports."