Washington: The highly publicized trade and security pact between U.S. President Donald Trump and South Korean President Lee Jae-myung, hailed as a landmark in bilateral relations, has hit a major obstacle. Despite being announced with fanfare two weeks ago, the agreement remains unsigned, with officials citing unresolved issues surrounding South Korea’s bid to build nuclear-powered submarines as the main sticking point.
The Trump–Lee summit was initially celebrated as a turning point in U.S.–South Korea relations. The proposed deal aimed to merge economic and defense cooperation into a single framework, promising reduced U.S. tariffs in exchange for massive South Korean investments across American industries. Reports suggested Seoul was ready to invest over $350 billion in U.S. projects, while Washington would provide tariff relief to major South Korean exporters, including the auto giant Hyundai.
However, despite political optimism, the formal signing has been delayed. Key documents including the official factsheet and the memorandum of understanding remain in draft form, awaiting final approval. Both sides have confirmed that while the trade portion is nearly settled, the submarine clause continues to generate friction between departments in Washington.
At the heart of the deadlock lies South Korea’s long-standing request for U.S. approval to develop nuclear-powered submarines a capability Seoul considers crucial amid escalating North Korean missile threats and regional maritime competition. During the October summit, President Lee reportedly pressed the issue, seeking American technical cooperation and permission to use U.S.-supplied nuclear fuel for the project.
While Washington appeared open in principle, bureaucratic divisions have slowed progress. U.S. agencies are still reviewing the security and non-proliferation implications of transferring such sensitive technology. According to a senior South Korean official, “each of the U.S. departments seems to need more time to adjust their opinions,” underscoring internal disagreements within the Trump administration.
The dispute intensified when President Trump claimed on social media that the submarine would be built in an American shipyard contradicting Seoul’s plan to produce the vessel domestically. This inconsistency has deepened confusion over how much control South Korea would have over its own defense development, raising political concerns in Seoul.
The diplomatic delay has also triggered economic ripples across East Asia. The South Korean won fell to its lowest level in seven months, hitting 1,467.5 per U.S. dollar, as investors grew anxious about the uncertainty surrounding the deal. Hyundai, one of the companies expected to benefit most from tariff relief, is reportedly losing nearly 300 billion won (about $211 million) every month as the pact remains pending.
Analysts warn that the prolonged impasse could erode confidence in Seoul’s economic diplomacy. “Markets were expecting swift implementation,” one financial expert noted, “but the submarine debate has turned a major opportunity into an exercise in delay.”
Beyond trade, the submarine issue carries far-reaching strategic consequences. A green light from Washington would mark South Korea’s entry into the elite group of nations capable of operating nuclear-powered submarines a move that would significantly alter the military balance in the Indo-Pacific. The U.S., however, has historically exercised extreme caution in sharing nuclear propulsion technology, even with close allies.
For Washington, the decision represents a delicate balancing act: deepening defense cooperation with Seoul while maintaining control over the spread of sensitive technologies. For Seoul, it is a matter of national pride and strategic autonomy the ability to defend its coasts independently amid growing regional threats from Pyongyang and Beijing.
President Lee, who showcased the deal as a diplomatic breakthrough, now faces mounting domestic pressure as opposition lawmakers accuse his administration of exaggerating progress. Without a signed agreement, Seoul’s parliament cannot proceed with the necessary budget allocations for investment commitments or defense modernization.
In Washington, Trump’s team is reportedly divided between those who view the deal as a major foreign policy success and others wary of setting a precedent that could encourage other allies to demand similar defense concessions.
Officials on both sides insist that the deal is not dead but “in its final stages.” The tariff schedule and investment framework are said to be complete, leaving the submarine clause as the last hurdle. Once U.S. departments reach consensus on the matter, a joint signing ceremony is expected to follow possibly before the end of the year.
Still, the impasse highlights the underlying tensions within modern alliances where economic partnership collides with the geopolitics of military technology. The Trump Lee deal, once touted as a symbol of renewed trust, now stands as a reminder of how even the strongest alliances can be tested by the fine print of strategic ambition.