The trade negotiations between South Korea and the United States are reportedly in a positive direction. In exchange for reducing mutual tariffs from 25% to 15%, South Korea is considering establishing a large-scale investment fund for the U.S.

Recently, Japan reduced its mutual tariffs with the U.S. from 25% to 15% by agreeing to create a $550 billion investment fund for the U.S. It also lowered auto tariffs from 25% to 12.5%, which effectively becomes 15% when including the existing 2.5% tariff. Initially, the proposed investment fund size was $400 billion, but former U.S. President Donald Trump raised the amount to $550 billion during the final stages of negotiations. In addition, Japan agreed to further open its automotive and agricultural markets to the U.S.

As a result, Japanese automakers saw significant stock increases. Toyota rose by 14%, Honda by 11%, Nissan by 8%, and Mazda by 17%. The reduced tariffs boosted the competitiveness of Japanese auto exports, driving up their stock prices.

While the exact size of the investment fund South Korea may need to create has not been confirmed, U.S. Secretary of Commerce Howard Lutnick reportedly proposed a fund worth $400 billion (approximately 548 trillion KRW) during recent trade talks with South Korea. However, sources say that negotiations remain fluid.

Given that Japan's economy is more than twice the size of South Korea's, establishing an investment fund of similar scale would be a significant burden for Korea. Korean automobile exports could lose price competitiveness compared to Japanese automakers if South Korea fails to reach a comparable deal with the U.S.

Consequently, the Japan-U.S. trade agreement is putting considerable pressure on the South Korean government in its negotiations with the U.S. As South Korea seeks a compromise or alternative plan, there is growing public interest in how the situation will unfold.

김주하 강남포스트 학생기자  webmaster@ignnews.kr

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