The government has successfully persuaded U.S. President Donald Trump in trade negotiations by highlighting an investment of USD 350 billion (approximately KRW 486 trillion) in the United States. This will allow for the reduction of reciprocal tariffs, automobile tariffs, and others to levels similar to those of major countries such as Japan and the European Union (EU).

The key to the tariff agreement was the USD 350 billion investment fund, which is divided into a USD 200 billion 'Strategic Industry Investment Fund' targeting semiconductors, nuclear power, secondary batteries, bio, and critical minerals, and a USD 150 billion 'MASGA (Make American Shipbuilding Great Again) Fund' aimed at reviving the U.S. shipbuilding industry. The Strategic Industry Investment Fund is expected to be operated with decision-making authority entirely in the hands of President Trump, with the Korean side providing loans or guarantees. In contrast, the MASGA Fund is a general fund led by the Korean government and shipbuilders.

● Trump: “A fund owned and controlled by the U.S.”

According to relevant ministries on the 31st, the USD 200 billion Strategic Industry Investment Fund, part of the USD 350 billion investment, was a surprise proposal modeled after Japan to persuade the U.S. during the final stages of the fast-paced Korea-U.S. tariff negotiations. It is reported that there was a tug-of-war with the U.S. over the scale until the last minute.

President Trump announced on his social network service (SNS) that the USD 350 billion proposed by Korea is an investment “owned and controlled” by the U.S., revealing the news of the negotiation's conclusion.

The Korean government maintains that the fund actually controlled by the U.S. is the USD 200 billion fund. If the U.S. wishes to build a semiconductor plant, both parties will negotiate to provide loans or guarantees within the USD 200 billion limit. Kim Yong-beom, Chief of the Presidential Policy Office, stated, “Although several safeguards are in place for the investment fund, it is an open fund unlike those we have discussed before, so we wanted to reduce its scope,” adding, “We held meetings and exchanged discussions with bated breath.”

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol also stated at the ‘Korea-U.S. Trade Consultation Results Briefing’ held in Washington, D.C., that “The USD 200 billion investment fund package is planned to be implemented in a manner similar to the USD 550 billion investment fund agreed upon by Japan and the U.S. The operation will depend on President Trump’s decisions on its use,” adding, “Considering the economic scale of Korea compared to Japan, agreeing on a 36% scale is significant.”

According to the government’s explanation, the USD 200 billion investment fund will largely consist of guarantees and loans rather than direct investment or equity. This means that financial public corporations such as the Korea Trade Insurance Corporation, the Export-Import Bank of Korea, and the Korea Development Bank will provide loans or guarantees for U.S.-led projects within the USD 200 billion limit.

This is similar in nature to the USD 550 billion ‘investment vehicle’ proposed by Japan to the U.S. According to the Japanese government’s official explanation, the proportion of direct investment in the investment package is about 1-2%. Kim stated, “Guarantees are the most prevalent, followed by loans, and direct investment will be very limited,” adding, “The fund is structured to include elements such as credit lines and guarantees, as documented in the memorandum.”

● “Unlike Japan, with safeguards… limited to specific sectors”

The government has stated that unlike the Japanese fund, the Strategic Industry Investment Fund has safeguards such as restrictions to industrial sectors where collaboration with Korea is possible. Kim said, “There is no expression in the Japanese fund about investing in safe areas guaranteed by the U.S. and in industrially rational areas.” The Strategic Industry Investment Fund is intended to be used exclusively in sectors deemed important by both the Korean and U.S. governments, such as semiconductors, nuclear power, secondary batteries, bio, and critical minerals.

Deputy Prime Minister Koo expressed expectations that “In the operation process of the USD 200 billion investment fund, there will inevitably be large and small support for our companies,” adding, “There is a high demand for U.S. nuclear power, and such funds can be utilized in these areas.”

Financial public corporations like K-Sure can provide guarantees where there is ‘national interest,’ meaning that even U.S. projects can receive guarantees if they are related to Korean industry. For example, if Korean equipment is used in building U.S. nuclear power plants or Korean batteries are supplied, the fund can be used for constructing U.S. electric vehicle plants. Korean entities can also provide guarantees for loans led by U.S. banks.

However, as details have not yet been finalized, the operation plan and funding methods have not been discussed. A financial industry source stated, “Even if loans and guarantees are the focus, USD 200 billion is a very large amount,” adding, “Ultimately, there is a possibility that the private financial sector will also participate in the form of guarantees or loans.” Kim also added, “The USD 200 billion fund is a matter that requires practical discussion.”

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