Seoul downplays US claim it will take 90% of Korean investment fund profits
Earlier, US President Donald Trump announced that the US and Korea have established a 'full and complete' trade deal, saying that Korea pledges to invest $350 billion into sectors 'owned and controlled by the United States' and selected by Trump.
Regarding this trade deal, the Korean government stated that $150 billion has been assigned for shipbuilding cooperation, while investments in chips, batteries, biotechnology and nuclear energy cooperation accounted for the remaining $200 billion.
Adding on to Trump's announcement, US Commerce Secretary Howard Lutnick wrote on X that "90 percent of the profits" will be 'going to the American people.' He claimed that the recent trade deals 'reflect the clear understanding that President Trump's tariff and trade agenda has the power to reshape global commerce.'
When asked about Lutnick's comments, presidential chief of staff for policy Kim Yong-beom told reporters that it is "difficult to discuss further details.'
'We have documented the matter slightly differently in a memorandum, but we are unable to disclose everything,' said Kim, adding that the US side is fully aware of the understanding and expectations of the Korean side.
Kim added that the split between the 90 percent and the 10 percent appeared to mirror phrasing previously used during trade negotiations between the US and Japan back on July 23.
'We don't have any intentions to argue over expressions, but the deal is not being negotiated that way,' Kim added.
During the presidential office's press briefing, Kim pointed out that the official text issued by the US reads 'retain 90 percent of the profits from this investment,' which, according to Kim, makes it difficult to interpret exactly what Washington intends.
'Since it's not yet clear who will invest how much and where, it's difficult to infer precisely what the US is thinking,' said Kim. 'Our interpretation here is that it essentially refers to reinvestment — that instead of profits immediately leaving as dividend outflows, they will remain in the US.'
The presidential chief of staff added that Korea was open to the arrangement if it ensured long-term benefits.
'If the US recommends truly good business opportunities, provides purchase guarantees and ensures our firms remain firmly involved, that would be fine,' Kim said. Mentioning that further discussions regarding investments are still rolling, Kim added that Korea expects to have opportunities to voice its opinion, 'to ensure that the fund operates in a way that doesn't harm (Korea's) interests.'
Comparing Korea's trade deal with Japan's earlier agreement with Washington, Kim noted that Korea's $350 billion fund is significantly smaller than Japan's $550 billion pledge, despite both countries recording similar trade surpluses with the US in 2024 — $66 billion for Korea and $68.5 billion for Japan.
'Excluding the $150 billion shipbuilding fund led by Korea, (Korea's) investment fund amounts to just 35 percent of Japan's,' Kim said, emphasizing that 'more safeguards were built into (Korea's negotiations).'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
a day ago
- Korea Herald
Poland signs $6.5 billion deal to purchase 2nd batch of K2 tanks
Poland on Friday signed a deal worth about US$6.5 billion to purchase the second batch of K2 tanks from major South Korean defense contractor Hyundai Rotem Co., Seoul's defense ministry said. The deal marks the largest-ever arms export contract won by a South Korean company and the first major one since the launch of the Lee Jae Myung administration in June. Under the deal, Poland will be supplied with 180 K2 tanks and 81 other support vehicles. It follows up on a contract Poland signed in 2022 for the first batch of 180 K2 tanks amid a major armament push after Russia's invasion of Ukraine. While the ministry did not specify the exact terms of the latest deal, 117 of the 180 tanks will reportedly be built by Hyundai Rotem, while the rest will be produced by Poland's state-owned defense company PGZ. The ministry said the latest contract includes production of a Polish variant of the K2 and development of other armored support vehicles, while opening the possibility of joint production and exports. South Korean Defense Minister Ahn Gyu-back and his Polish counterpart, Wladyslaw Kosiniak-Kamysz, attended the signing ceremony between Hyundai Rotem and Poland's armament agency in Gliwice in southern Poland. "Through the signing of the second K2 executive contract, (we) have created an opportunity to solidify our strategic partnership beyond a simple relationship between a supplier and a user," Ahn was quoted as saying at the ceremony. Before the ceremony, Ahn held talks with Kosiniak-Kamysz to discuss ways to deepen their countries' cooperation in the arms industry. Ahn pledged support and training for Poland's use of Korean weapons systems, including the K2 and K9 self-propelled howitzers, and also proposed cooperation in Warsaw's other defense projects, including its plan to acquire submarines. Ahn also invited his Polish counterpart to Seoul, to which Kosiniak-Kamysz replied he would make the visit at an early date, according to the ministry.
Korea Herald
a day ago
- Korea Herald
Hanwha says US Navy chief toured Philly Shipyard ahead of Korea-US tariff deal
US Navy Secretary John Phelan and White House Budget Director Russell Vought visited Hanwha Group's Philly Shipyard in Philadelphia on Wednesday, just hours before South Korea and the US finalized their new tariff agreement, Hanwha said Friday. The visit is seen as a contributing factor in the deal, with a shipbuilding partnership between the two countries reportedly playing a key role. According to Hanwha, Phelan and Vought toured major production facilities at the Philadelphia site, guided by Hanwha Group Vice Chair Kim Dong-kwan, alongside other senior US government officials. The US delegation also visited Hanwha's welding training center and inspected equipment relocated from the company's Hanwha Ocean shipyard in Geoje, South Gyeongsang Province. Hanwha said the American officials' visit focused on reviewing the company's investments to bolster local shipbuilding capacity. Phelan emphasized that establishing a robust marine industry foundation was a top priority for both the Trump administration and the US Navy. Kim reiterated Hanwha's commitment to supporting the revitalization of US shipbuilding by establishing new shipyards and developing related industrial networks. On the day of the visit, Korea and the US agreed to reduce the planned reciprocal tariffs on imports to the US from 25 percent to 15 percent, including on automobiles and auto parts. Hanwha cited a US government source as saying that feedback from the delegation was delivered to US President Donald Trump and influenced the final outcome of the deal. During negotiations, Korea proposed the "Make American Shipbuilding Great Again," or MASGA, an initiative aimed at revitalizing the US shipbuilding industry. Of the $350 billion Korea pledged to invest in the US as part of the agreement, $150 billion will be allocated to enhancing the shipbuilding partnership. Kim also traveled to the US to support the negotiations. Hanwha's Philadelphia Shipyard, acquired for $100 million in 2024, has been positioned as a symbol of Korean support for the US shipbuilding industry. Trade Minister Yeo Han-koo, a member of Korea's tariff negotiation team, said business leaders, including Kim, worked closely with the government by sharing strategic information and leveraging their networks. 'I believe their support definitely contributed to the success of the deal," Yeo said in a briefing after the tariff deal concluded on Wednesday. Hanwha plans to expand the shipyard as a center for shipbuilding, maintenance, overhaul and repair for US naval vessels. The company said it will apply production and operations systems used in Korea to increase annual capacity from one ship to 10 by 2035.
Korea Herald
a day ago
- Korea Herald
Korean stocks tumble on tax reform letdown, trade uncertainty
South Korea's benchmark Kospi slumped nearly 4 percent on Friday, marking its steepest single-day drop in two months, as investor optimism soured following disappointment over the government's tax code revision and mounting uncertainty over US tariff talks. The Kospi closed at 3,119.41, down 3.88 percent from the previous session. The selloff was led by institutional and foreign investors, who offloaded 10.7 trillion won ($7.6 billion) and 656.5 billion won worth of shares, respectively. Retail investors extended profit-taking for a second straight day, snapping up a net 1.63 trillion won worth of shares on Friday alone. Friday's plunge snapped a rally that had gained momentum since President Lee Jae Myung took office on June 4, fueled by expectations of market-friendly policies. Those hopes had propelled the Kospi 20 percent, with the index setting a new annual high of 3,288 just a day earlier. But Thursday's late-session profit-taking signaled growing caution, which deepened sharply the following day. Friday's decline marked the largest daily fall in two months and dragged the index below the 3,200 level for the first time in five sessions. Markets reacted negatively to details of the tax code overhaul unveiled late Thursday, which fell short of investor expectations. Key changes include lowering the capital gains tax threshold for major shareholders to 1 billion won from 5 billion won, and reinstating the stock transaction tax, which imposes a 0.2 percent levy on financial investment income. While separate taxation for dividend income is designed to boost investment, the higher-than-expected top tax rate of 35 percent on income exceeding 300 million won sparked concern among investors and companies, particularly those working to improve dividend payouts. Sentiment was further dented by lingering uncertainties over trade policy. Although Korea and the US reached an agreement the previous day to apply a 15 percent tariff on Korean imports, which is lower than the initially threatened 25 percent, lingering concerns over Free Trade Agreement-beneficiary sectors, such as autos, continued to weigh on the market. The tech-heavy Kosdaq index fared even worse, tumbling 4.03 percent to close at 772.79, finishing below 800 first time since July 15. Spreading uncertainty has weakened the Korean won, pushing it above the 1,400 mark against the US dollar for the first time in about two months. As of 4:30 p.m., the won was trading at 1,404 won per greenback. 'Policy momentum had been one of the strongest drivers of the July rally,' said Lee Jae-won, an analyst at Shinhan Securities. 'That pillar crumbled under the weight of investor disappointment, fueling the sharp decline.' Lee noted that Friday's heavy foreign net selling was particularly critical in triggering the rout. Lee Kyoung-min of Daeshin Securities said the market is entering a consolidation phase as the second-quarter earnings season unfolds and recent overheating unwinds. 'As investors reassess earnings across sectors that had surged on optimism or slumped on concerns, we expect rotation and relative value adjustments to accelerate,' Lee said. 'Even small triggers could prompt swift profit-taking and a rapid unwinding of overheated positions, warranting caution.' jwc@
