South Korea Warns US Demands May Spark Financial Crisis
South Korean President Lee Jae-myung has warned that U.S. investment demands in ongoing trade talks could spark a financial crisis similar to the 1997 Asian meltdown. He cautioned that without financial safeguards, such commitments would put the nation at severe risk.
What the Deal Involves
In July 2025, Seoul and Washington reached a verbal understanding: the U.S. would reduce tariffs on South Korean exports in exchange for US $350 billion in South Korean investments. The agreement, however, has not been finalized, as both sides continue to negotiate the structure of the investment.
Currency Risk and Safeguards
Lee emphasized that forcing South Korea to provide the investment fully in cash and outside the country, without a currency swap mechanism, could expose the economy to dangerous levels of foreign exchange volatility. He noted this could mirror the vulnerabilities that led to the 1997 financial crisis.
Broader Context and Concerns
The president also expressed concern over a recent immigration raid in Georgia that targeted South Korean workers, warning that such incidents could undermine investor confidence. He stressed that while trade and security relations with the U.S. are vital, South Korea will not compromise its financial stability.
