Seoul: South Korea has firmly rejected U.S. President Donald Trump's demand for a $350 billion upfront investment in the United States as part of a trade agreement aimed at reducing U.S. tariffs on South Korean goods from 25% to 15%. South Korea's National Security Adviser, Wi Sung-lac, emphasized that such a substantial payment could jeopardize the nation's financial stability and is beyond their economic capacity. He clarified that this stance is not a negotiating tactic but a realistic assessment of South Korea's financial situation.

In response, South Korea has proposed structuring the investment through loans, loan guarantees, and equity, rather than a direct cash payment. This approach aims to mitigate potential economic risks while still fulfilling the investment commitment. President Lee Jae Myung has raised alarms about the potential economic fallout from such a large outlay without financial safeguards like a currency swap agreement. He warned that proceeding without such protections could lead to a financial crisis reminiscent of the 1997 Asian financial meltdown.

Talks between the U.S. and South Korea to formalize the trade agreement have reached an impasse, primarily due to disagreements over the control and structure of the proposed investment. The U.S. insists on a direct upfront payment, while South Korea seeks more flexible terms. The uncertainty surrounding the trade deal has contributed to a decline in the value of the South Korean won, which recently fell past the key 1,400 per dollar mark. Analysts warn that without a currency swap agreement, the won could depreciate further, potentially reaching 1,450 per dollar.

South Korea aims to resolve the matter at the upcoming Asia-Pacific Economic Cooperation (APEC) summit, which President Trump is expected to attend. The summit presents an opportunity for both leaders to negotiate terms that address South Korea's concerns while meeting the U.S.'s objectives.