South Korean President Lee Jae Myung speaks throughout a South Korea-U.S. enterprise roundtable at The Willard Hotel in Washington, D.C., U.S., August 25, 2025.
Annabelle Gordon | Reuters
South Korea’s economic system might fall into crises rivaling its 1997 meltdown if the federal government accepts present U.S. calls for in stalled commerce talks with out safeguards, President Lee Jae Myung informed Reuters.
Seoul and Washington verbally agreed to a commerce deal in July wherein the U.S. would decrease President Donald Trump’s tariffs on South Korean items in trade for $350 billion in investment from South Korea, amongst different measures.
They have but to place the settlement on paper due to disputes over how the investments could be dealt with, Lee mentioned.
“Without a currency swap, if we were to withdraw $350 billion in the manner that the U.S. is demanding and to invest this all in cash in the U.S., South Korea would face a situation as it had in the 1997 financial crisis,” he mentioned via a translator.
In an interview in his workplace on Friday, Lee additionally spoke about an enormous U.S. immigration raid that detained a whole lot of Koreans, in addition to Seoul’s relations with rival North Korea, neighboring large China and Russia.
But commerce and protection talks with the U.S., South Korea’s navy ally and a high financial associate, are overshadowing a visit Lee makes from Monday to New York, the place he’ll handle the United Nations General Assembly and be the primary South Korean president to chair a gathering of the Security Council.
Praises Trump dealing with of Hyundai raid
Lee, a liberal, took workplace in a June snap election after his conservative predecessor, Yoon Suk Yeol, was faraway from workplace and jailed for briefly imposing martial legislation. Lee has sought to calm the nation and its economic system and mentioned he plans to make use of his U.S. go to to inform the world that “democratic Korea is back.”
Detainees are made to face towards a bus earlier than being handcuffed, throughout a raid by federal brokers the place about 300 South Koreans had been amongst 475 folks arrested on the web site of a $4.3 billion venture by Hyundai Motor and LG Energy Solution to construct batteries for electrical vehicles in Ellabell, Georgia, U.S., September 4, 2025 in a nonetheless picture taken from a video.
U.s. Immigration And Customs Enforcement | Via Reuters
Lee met Trump for his or her first summit in August, saying he had constructed a powerful private tie with the U.S. chief, regardless of not agreeing on a joint assertion or concrete announcement.
This month Trump’s administration rocked South Korea with the arrest of greater than 300 South Korean employees at a Hyundai Motor battery plant in Georgia, with federal officers accusing them of immigration violations.
Lee mentioned South Koreans had been naturally angered by the “harsh” remedy of the employees – the Trump administration printed photos of them in shackles – and has warned it might make corporations cautious of investing within the United States.
But he mentioned the raid wouldn’t undermine the bilateral alliance, praising Trump for providing to let the employees keep. Lee mentioned he didn’t consider it was directed by Trump however was the results of overzealous legislation enforcement.
“I do not believe this was intentional, and the U.S. has apologized for this incident, and we have agreed to seek reasonable measures in this regard and we are working on them,” he mentioned.
Lee’s workplace says there isn’t a plan for him to satisfy Trump in New York and that the commerce talks will not be on the go to’s agenda.
Stumbling block in commerce talks
Commerce Secretary Howard Lutnick has mentioned South Korea ought to comply with Japan’s cope with the United States. He mentioned Seoul both wants to just accept the deal or pay the tariffs, utilizing the Trump administration’s depiction of international governments paying the levies, that are as an alternative paid by U.S. importers.
U.S. Secretary of Commerce Howard Lutnick and South Korean President Lee Jae Myung take part in a South Korea-U.S. enterprise roundtable at The Willard Hotel in Washington, D.C., U.S., August 25, 2025.
Annabelle Gordon | Reuters
Lee, requested if he would stroll away from the deal, mentioned: “I believe that between blood allies, we will be able to maintain the minimum amount of rationality.”
South Korea has proposed a international trade swap line with the U.S. to scale back the shock of the investments on the native marketplace for the gained forex. Lee didn’t handle how doubtless the U.S. was to agree or whether or not that might be sufficient for the deal to go ahead.
He mentioned South Korea is totally different from Japan, which struck a commerce cope with the U.S. in July. Tokyo has greater than double South Korea’s $410 billion international trade reserves, a global forex within the yen and a swap line with the United States, Lee mentioned.
Seoul and Washington have mentioned in writing that any investment initiatives should be commercially viable, however figuring out the small print is proving troublesome, he mentioned.
“Reaching detailed agreements that guarantee commercial reasonableness is now the central task – yet it also remains the biggest obstacle,” Lee mentioned. Proposals throughout working-level talks present no assurance of business viability, making it laborious to bridge the hole, he mentioned.
Trump says the investments will likely be “selected” by him and managed by the U.S., which means Washington would have discretion over the place the cash will likely be invested.
But Lee coverage adviser Kim Yong-beom mentioned in July that South Korea had added a security mechanism to scale back financing danger, together with supporting commercially possible initiatives slightly than offering unconditional financial assist.
Lee mentioned South Korea and the United States don’t disagree on growing Seoul’s contributions towards its personal defence, bolstered by 28,500 U.S. troops on the Korean peninsula, however that Washington desires to maintain safety and commerce talks separate.
“We should end this unstable situation as soon as possible,” he mentioned, when requested whether or not talks might lengthen into subsequent yr.
Tensions with North Korea, China, Russia
Lee has sought to scale back tensions with nuclear-armed North Korea. Pyongyang has rebuffed the South’s overtures, and Lee mentioned he was not optimistic concerning the prospect of inter-Korean talks in the intervening time.
During their assembly, Lee inspired Trump to attempt to meet once more with North Korean chief Kim Jong-Un throughout Trump’s journey subsequent month for an Asia-Pacific summit Lee will host within the South.
Lee informed Reuters his authorities doesn’t have detailed info on the standing of any talks between Washington and Pyongyang. “It is our judgment that they are not engaging in concrete conversations,” he mentioned.
He mentioned he shares his predecessor Yoon’s view that North Korea’s navy cooperation with Russia is a major menace to South Korea’s safety. But he mentioned it’s not sufficient to reply in a simplistic option to the problem, which should be addressed via dialogue and coordination.
The North Korean chief and Russian President Vladimir Putin stood shoulder to shoulder this month in Beijing when Chinese President Xi Jinping hosted them at a large navy parade and summit.
In this pool {photograph} distributed by the Russian state company Sputnik, (L-R) Russia’s President Vladimir Putin walks with China’s President Xi Jinping and North Korea’s chief Kim Jong Un earlier than a navy parade marking the eightieth anniversary of victory over Japan and the tip of World War II, in Beijing’s Tiananmen Square on September 3, 2025.
Sergey Bobylev | Afp | Getty Images
Lee mentioned there’s growing confrontation between a socialist camp of nations and a capitalist, democratic camp that features Seoul, and South Korea’s geography threatens to position it on the frontier of any battle with the opposite camp.
He mentioned there’s an escalatory spiral of rivalry and tensions the place South Korea, Japan and the United States deepen cooperation and China, Russia, and North Korea work extra intently collectively. “This is a very dangerous situation for Korea, and we must find an exit ramp out of the escalating military tensions,” Lee mentioned. “We must find a way for peaceful coexistence.”